Fraudster used loan lending app to extort money — Here’s how you can stay safe | Mint

One cybercriminal was arrested in Pune for targeting hundreds of individuals who had taken small loans through various mobile applications, Indian Express reported. The case unfolded like this: An individual got a message from an unidentified number offering money. Since he needed it, he took a loan of ₹5,000.

Following that, he received several calls from different Pakistan numbers demanding ₹9,000 (loan plus interest). This demand was later raised to ₹15,000. When the borrow refused to pay this amount, his morphed photos were sent to his contacts.

The loan provider managed to do this by gaining access to his contacts and photos when the individual downloaded the mobile application.

Here we share some tips to stay safe and secure at the time of downloading any loan lending application. At the time of borrowing loan from a loan lending app, you can take the following steps.

Necessary points to be aware of

I. Credible phone apps: It is recommended only the ones which are credible, famous and linked to some RBI’s regulated entity such as a bank or NBFC. At times, banks outsource some part of their function to the lending service providers (LSPs).

Although LSPs are not involved in handling of funds which flow directly from lender (i.e., bank) to the borrower, they are governed by RBI’s digital lending guidelines. So, it is important for the borrower to understand where the money is coming from.

II. High Rate of interest: Although rate of interest can be high (between 12-18 percent) if your credit score is low, but a very high rate of interest, say 35 percent, should be avoided.

It could be some unregistered lender looking for hapless borrowers who are in urgent need of instant money. In the case described above, the lender was asking for ₹15,000 for ₹5000 loan, which means 200 percent of loan amount as compensation.

III. Regulations: Last but not the least, it is important for the borrower to check whether loan provider is acting on behalf of an RBI regulated financial institution. If it does not fall under the domain of regulations, it can go to any extent to fleece users.

Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.

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