Indians using rapid lending applications were charged a 25% interest rate: Survey
The analysis also revealed that extortion or data misuse during the collection procedure was reported by 54% of the persons who participated in the survey.
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According to a survey released by the neighborhood-focused social media platform Local Circles, at least 58 percent of Indian citizens in the past two years who took out a loan using an instant loan app had to pay an annual interest rate of over 25 percent.
14 percent of respondents to the company’s survey of over 27,500 Indians living in 409 districts reported using instant lending apps in the previous two years. Of these, 58% reported that they or a member of their household had used rapid lending applications since 2020 and had been subject to yearly interest rates of over 25%.
The analysis also revealed that extortion or data misuse during the collection procedure was reported by 54% of the persons who participated in the survey.
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According to consumer feedback, rapid lending apps typically charge 30–60% interest on a loan of $3,000–$5,000, and as a result, interest rates vary depending on the loan amount and time required to repay the loan.
Some platforms reportedly imposed interest rates of up to 400–500 percent at the height of the pandemic.
Governor Shaktikanta Das has stated that the Reserve Bank of India (RBI), many of which are unlicensed and illegal, will shortly provide a regulatory architecture for digital lending platforms.
As a result of harassment by a handful of the owners of digital lending applications, there have been a rising number of cases of reported suicides of borrowers.
“I think very soon we will be coming out with a broad regulatory architecture, which should be able to address the challenges that we are confronted with regard to lending through digital platforms, many of which are unauthorised, unregistered and, should I say, illegal,” Das said while delivering a lecture on – Indian Businesses (Past, Present and Future).
The governor also advised users to exercise caution because the majority of digital lending apps are independently run and not registered with the central bank.
However, he added, the RBI will intervene if it gets complaints about lending sites that are registered with it.
According to the RBI report, Maharashtra has received the most complaints, followed by Karnataka, Delhi, Haryana, Telangana, Andhra Pradesh, Uttar Pradesh, West Bengal, Tamil Nadu, and Gujarat.
After receiving hundreds of reports of consumer harassment and threats from phoney loan recovery agents, the Maharashtra police cybercrime unit wrote to Google Play Store and requested that 69 lending apps be removed.