scorecardresearchPlanning to get a loan via a digital app? Make sure it is not fake

Planning to get a loan via a digital app? Make sure it is not fake

Updated: 28 Jul 2022, 10:32 AM IST
TL;DR.
Fraudulent financing websites are becoming more prevalent in our nation, which is harming the standing of the online lending sector. We outline a few procedures you may take to verify the legitimacy of a digital lending platform in order to prevent such situations.
We explain key points to check if a digital lending platform is fake.

We explain key points to check if a digital lending platform is fake.

Recently, the Mumbai police received two reports of internet fraud involving loan app agencies. In all instances, after gaining access to the contact list, the victim and his family were harassed by calls. We hear these headlines frequently; they are not uncommon.

The number of clients transacting through digital platforms has increased as the economy moves toward a more fintech-inclined area. However, our country is also seeing an increase in fraudulent financing platforms that are ruining the reputation of the electronic lending industry.

To avoid such cases, there are few steps you might take to check the authenticity of a digital lending platform:

Firstly, it is crucial to verify the identities of the lending businesses connected to the app as according to a recent google guideline, lending applications must reveal the names of all registered NBFCs and banks they are connected to.

Numerous fraudulent applications have been found that falsely claim to be affiliated with authorized NBFCs. As a result, to confirm all pertinent information about the approved digital platform providers of the relevant NBFCs, one should constantly examine the "partners" section of the NBFCs' websites.

Secondly, according to a study by the Reserve Bank of India (RBI) working group on digital lending, there are 600 or more "illegal loan applications" available to Android users in India across several app stores. Therefore, before installing an app, a loan applicant should first confirm the app's name, ratings, reviews, etc. on the app store.

Additionally, before applying for a loan, users should also conduct their research and try to find out information about the firm running the app, such as its website, contact information, physical office address in India, and the information of lenders disbursing loans through the app. Rogue applications may provide inaccurate or inconsistent addresses for actual addresses.

Furthermore, according to RBI-prescribed standards on the Fair Practice Code, a loan provider must be clear and forthright when disclosing information that is relevant and impacts the borrower's interest so that the borrower may make decisions. Rogue apps typically either don't give loan papers or don't supply the information required by RBI.

Lastly, one significant issue that the unlawful applications have brought up is data collecting by deceitfully obtaining various user permissions and subsequently exploiting them. After declaring usage of each data/access permission so received, apps are allowed to gather just the minimal amount of personal data that is necessary. Consequently, you should use caution while granting permissions.

Though digital technology makes it possible for loans to be disbursed quickly and with less paperwork, keep in mind that it may also be exploited fraudulently. The greatest strategy for avoiding digital lending frauds is to always be on the lookout for possible scams, double-checking every loan offer, lending site, and lender's credentials, and keeping an eye out for the warning signs described previously.

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First Published: 28 Jul 2022, 10:32 AM IST