Loan applications in India shame borrowers who cannot repay


HYDERABAD, India – The harassing calls began shortly after sunrise. Kiran Kumar lay in bed and, for hours, pondered how he was going to end his hostage of a lifetime.

The cement seller initially borrowed around $ 40 from a lender through an online app to supplement his salary by $ 200 per month. But he couldn’t afford the rising fees and interest, so he borrowed from others. That morning, Mr. Kumar owed about $ 4,000.

Worse yet, the lenders had the phone numbers of his relatives and threatened to publicize his problems.

“If I am labeled a fraud in front of everyone, my self-esteem is gone, my honor is gone,” Mr. Kumar, 28, said in an interview. “What’s left?”

Authorities in India There are growing concerns that many more victims like Mr. Kumar may be there. They believe that a new breed of moneylender, his sharpened technique in China, has fallen prey to the working class and rural people who have been devastated by the impact of the coronavirus on the Indian economy.

These lenders do not need credit scores or visits to a bank. But they charge high costs over a short period. They also need access to a borrower’s phone, siphoning off contacts, photos, text messages, even battery percentage.

Then, they bombard borrowers and their social circles with pleas, threats and sometimes false legal documents that threaten serious consequences in the event of non-payment. In conservative and tightly knit communities, such a loss of honor can be devastating.

A single police investigation in the city of Hyderabad has mapped about 14 million transactions across the country worth $ 3 billion over about six months. The Indian central bank as well as the national authorities are currently carrying out an investigation.

“It is becoming difficult for us to count the zeros,” said Avinash Mohanty, the co-commissioner of police in Hyderabad. Police attribute five suicides in the city to lenders.

About 100 loan applications have been removed from the Google platform, according to the Indian government. A Google spokesperson said he had reviewed hundreds of loan applications and removed those that violated its terms.

Surveys are sounding the alarm in India about the vulnerability of a population of 1.3 billion people who are still getting used to digital payments. Online transactions in India will reach over $ 3 trillion by 2025, according to PwC, the consulting firm. Further fraud discoveries could prompt the government, which has already limited personal data that online businesses can use to gain more insight into the industry.

The apps also speak to the global nature of online fraud. Many companies use techniques that flourished in China two years ago before authorities shut them down, and which since reappeared elsewhere.

Loan applications came at a desperate time. The government declared a severe two-month blockade a year ago to contain the virus, plunging India into a deep recession. Millions of people have been made unemployed. Traditional forms of lending, such as banks and microloans, have been temporarily closed.

With names like Money Now, First Cash, Super Cash and Cool Cash – according to police documents – apps came and went on Google’s App Store in India, with some reappearing with a slight change of identity. Most were built with out-of-the-box software that made creating them as easy as starting a blog, said Srikanth Lakshmanan, one of the coordinators of Cashless Consumers, a collective of tech volunteers who study apps.

With a few clicks on a phone and a new selfie, a borrower could get the money needed for a doctor’s appointment, to restock the kitchen, or to pay a child’s school fees.

Repayment could be due as quickly as a week. Lenders often added interest and fees of up to a third of the loan even before they sent the money, so borrowers already owed more than they received. And in order to get the money, borrowers had to hand over their personal information.

That’s when the call centers kicked in, according to police and analysts. First, they would encourage borrowers to repay principal, interest, and fees. Then they would call their friends and family, sometimes wrongly saying that the borrower was wanted by the police. Some created WhatsApp groups, added members of the borrower’s contact list, and then bombarded the group with accusations. Some would steer desperate borrowers to other money-lending services, trapping them further.

Hyderabad police took note of last winter after the suicides and after people filed harassment complaints. They were blocked until an informant showed up and, in exchange for a reward of around $ 150, shared the address and details of a call center where a close friend worked as an agent. recovery.

In an interview with the New York Times, the debt collector – a fast-talking 24-year-old who earns about $ 130 a month – said every day he would receive electronic files on about 50 borrowers. The files included their personal details, copies of their government credentials and contact lists.

Workers could make a weekly bonus of around $ 7 if they pressured three-quarters of borrowers to repay their loans, said the debt collector, who requested anonymity for fear of retaliation from from his former employer. The bonus doubled for a success rate of four fifths or more. Customers often asked for time, the officer said, and some even said the constant harassment would result in their deaths. The debt collector, his eyes on the bonus, would go on anyway.

So far, investigations in Hyderabad have led to raids on call centers in at least four Indian cities, with each center employing between 100 and 600 people.

Some companies have relations with China. So far, at least four Chinese nationals have been arrested, police said. While reverse engineering the most exploitative applications, activists like Mr. Lakshmanan discovered that many were hosted on Chinese cloud services and used Chinese software development kits and facial recognition tools.

Police have frozen bank accounts of around $ 40 million so far. But the trail often leads to shell companies, networks used for money laundering or cryptocurrencies, which are difficult for governments to follow.

Yet the publicity in Hyderabad fueled a backlash from the public.

Mr. Kumar, the cement salesman, is now part of an online advocacy group. About 60 victims have joined its WhatsApp channel, where they design responses to continuing harassment calls or provide support.

What saved Mr Kumar on the morning of last summer when he was in bed and thought to end his life was one last call to a friend. The friend recognized the urgency, rushed into the room, and within hours helped recover the $ 400 Mr. Kumar had to pay that day to alleviate some of the harassment.

“Without my friend, I was 90% sure that day that I would kill myself,” Kumar said. “I always get calls. But now I tell them, “Do whatever you can”. I am not worried now. I feel protected. “

But for some families, neither the pain nor the harassment has gone away.

G. Chandra-Mohan, a 38-year-old father of three who worked in a clothing warehouse, took out loans of around $ 1,000. After interest, fees and penalties, as well as borrowing from other services to stay afloat, her balance was five times that. With a salary of $ 200 a month and the $ 80 a month his wife, Sarita, earned from a part-time job in a lab, he couldn’t pay it back.

Mr Chandra-Mohan has maximized his credit cards and tapped into dozens of loan applications, his family said. When he complained about the harassment to the police, they told him to turn off his phone for a few days and come back if it continued, his stepfather, Mr. Sailu, said. Police said he may have called a cybercrime hotline, but had no record of his visit to a police station.

One morning, after Mr. Chandra-Mohan drove his wife to his office in the back of his motorbike, he gave change to his three young daughters and sent them to their grandparents around the corner. Then he hanged himself from a fan.

“Even after his suicide,” said his wife, “the phone keeps ringing.”

If you are having thoughts of suicide, call the National Suicide Prevention Lifeline in the United States at 1-800-273-8255 (TALK). In India, contact 91-9820466726 or to go to the website of for more resources.

Cao Li contribution to reporting from Hong Kong.

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