calls for digital literacy | Deccan Herald

The promise of easy loans shapes a vulnerable group of borrowers, many of whom are not eligible to borrow through conventional banking platforms. Industry insiders have been seeking tough remedial action from regulators, including prescribed rules on interest rates. While calls for greater digital literacy among the public have continued, experts say the onus is on regulators to help identify safe lending platforms and processes.

There is a need to improve digital literacy and the RBI is doing its part to spread awareness about the issue, said Harshvardhan Lunia, CEO and founder of Lendingkart, a loan disbursement app. It has been observed that during loan application procedures involving unregulated lenders, the borrower tends to overlook aspects including lender credentials, processing, and pre-closing fees.

A senior police officer in Bangalore who has worked on harassment cases by loan service providers said that most of the unregulated digital lending platforms emerged after Covid. Job losses and growing financial liabilities led many to apply for loans digitally. “There is desperation and when easy loans are offered, borrowers tend to ignore data privacy concerns. There needs to be greater awareness of the dangers of downloading these unregulated loan applications,” the official said.

The RBI has been declaring its intention to nurture a regulated lending ecosystem without stifling innovation. The bank, in its latest recommendations, has said that the scope of financial education centers and e-banking (E-baat) training and awareness programs could be expanded to include digital lending.

Standard fault is invariably reserved for the “gullible” borrower.

the embarrassing agents

Cyber ​​security expert Ritesh Bhatia dissects a standard crime involving aggressive loan disbursement and recovery by unregulated digital lenders in multiple phases:

Against the application for a loan of Rs 5,000, the lender could release Rs 3,000, claiming that taxes and service charges cover the unpaid component. Within a week, repayment requests (at high interest rates) begin. Text messages are sent to the user’s contacts to inform them of the user’s non-payment. The shame begins.

The second phase is more unpleasant as the user’s images are accessed from the gallery, transformed into obscene content and shared with contacts.

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