Karnataka CID raids companies behind digital lending apps, two held

Instant Loan

Officials have seized laptops, mobile phones and other documents from these companies

IANS

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The Criminal Investigation Department (CID) of Karnataka police on Thursday arrested two prominent officials, including the Chief Financial Officer, of an instant mobile loan app company for reportedly harassing customers over non-payment of loans. The customers were given a hand loan for a period of a week or two weeks. If the defaulter was a woman, the recovery agent asked for sexual favours and threatened them with physical and sexual assault, investigating officials said.  The CID raided four companies — Mad Elephant Technologies Pvt Ltd, Borayanxy Technologies Pvt Ltd, Profitise Pvt Ltd and Wizzpro Solutions Pvt Ltd, after receiving complaints of harassment from customers who were being charged a whopping 36% interest on the hand loans of Rs 9,000 and Rs 15,000. They have also seized laptops, mobile phones and other documents from these companies. Additionally, they found that the companies obtained sensitive data like contacts and photographs from the customers’ phones and used it to mount pressure on them to ensure repayment of loans. The companies allegedly hacked phones of the defaulters and shamed them in a WhatsApp group consisting of their friends and family with tags like ‘thief’, ‘fraud’ and ‘defaulter’. The companies would force them into a debt trap by compelling them to take a similar loan from another firm. According to the CID, all the apps were built on one software development kit, which is suspected to be sourced from China. A CID officer, speaking on the condition of anonymity, told IANS that most of these apps have allegedly been developed with the help of Chinese funding and each of these companies developed multiple apps to disburse loans. The officer added that loan recovery agents used fake SIM cards to harass defaulter customers. "Most of these apps are cloud-based systems which are accessed and monitored by neighbouring countries (China)," the officer said. The CID appealed that people should come forward to lodge complaints against such instant loans through mobile phone apps. The raids come at a time when several deaths by suicide have been reported due to harassment from such apps.  Read: Harassment by digital lending apps driving defaulters to suicide, but no action from RBI RBI cautions individuals, small businesses against unauthorised digital lending apps  

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