In this year of COVID-19, multiple people face job loss and job cuts and while full filling their needs they take loans. This pandemic condition made people more desperate than they normally apply for a loan. This reason has made the people easy targets for the malicious loan application that was operated outside the region.

In 10 months, as this pandemic stated, around $3 billion worth of scam loan transactions were taken place. As we know that technology has its advantages and disadvantages. The victims of these scams are the people who are connected through the banking sector. While this pandemic brings several problems that include joblessness and pay cuts that lead the peoples to the urgent need for cash and force them to take the loan and all.

This pandemic caused several problems from the actions that were taken by these dynamic Chinese tech ecosystem with India. That includes the top smartphone sellers like Oppo, Vivo, Realme, OnePlus, and all those who invest their time and money in the country. Multiple startups that have grown according to the time that includes Paytm, Ola, and others have been helped through the Chinese money. According to the survey, China invests around $4 billion in India to help these startups through the companies Tencent and Alibaba’s Ant Financial.

What Exactly Happened?

In this revolution, the internet has played a crucial role, in different fields like transportation, e-commerce, food-tech, and many other have those have the advancement of automation, logistics, and cloud services are rapidly growing in the period of lock-down.

Whereas the booming area that grows in this period on COVID-19 is a fin-tech department, which is responsible for providing solutions to the consumers in the form of money credit, supply chain finance, insurance, wealth management, and digital payments.

In India majorly, small towns and other are always wanted to increase their banking revenues. However, the private bank that started in the early 2000s is now calculating that these are not making enough profit on account per basis while expanding their business.

This epidemic increases the mode of digital payments, but the poor internet speed always made a hindrance in it. As the result, the money lenders who are part of rural and semi-urban areas are continued to ply their trade. Due to several disadvantages, the money lenders charged around 300% of interest, while giving the money to the needy peoples.

Since multiple people got instant-loan approvals from these applications they start borrowing from them with thinking properly. They haven’t a thing that the money that they borrow is becoming painful for them in future.

Now, read the upcoming section to know how this all became a scam?

Starting of this Scam

The working of this scam is very simple. For example, a borrower takes an instant-loan of Rs, 4000 from any of this application. Then in few days, he/she find-out that some Rs around 25000 are deposited into their account from different applications that he/she never used or downloaded into their phones.

Before he/she will able to know what is going on, they got the call or SMS from the borrower that he/she had to pay around Rs 50000 as the repayment of the amount they borrowed.

In case he/she were unable to make these payments then they are threatened by the agents of these applications, who may misuse their data and do random things. The moneylenders also sent the notification related to repayment of the loan to their contacts and they will also send the SMS to their WhatsApp groups.

This self-humiliation will result in more than 6 suicide cases were reported in Telangana so far, are they are rapidly increasing day by day across the country.

What Experts Says?

When the experts from Indian consumer collectives are decided to investigate these cases, they discovered a large scam behind this.

These applications that give the money will take the user data and store it in China. According to the survey more than 1050 instant loan application that includes Cash Train, Cash Bus, Super Cash, Mint Cash, Happy Cash, Loan Gram, Repay One, Money Box, Rupee Day, and many others. However around 300 application has its websites, albeit and scant information.

The banks and other non-banking companies that distributed loans are having a list of all the documents that buyers had to provide before taking a loan. The application that enters digital lending applications that are providing the microloans in short payment of time cost higher interest more than 1% a day. It is very tough for a person to pay this back.

According to the investigation of the Save-India Foundation Cybersecurity team, investigated these instant-loan applications are used hundreds of according that were operated from abroad.

Further investigation will reveal that the Indian proxies as directors and used the local CA to set up the companies. This CA helps the investors to float over 40 companies, of which 12 are providing the loan facility.

Apart from this Police from 4 different states in India arrested more than seven Chinese nationals this month who are running the show with 35 Indian experts. However several scams were founded that are linked to Pune, Bengaluru, Hyderabad, and Gurugram.

Whereas the payment gateways assisting these companies by providing the online wallets that include PayTM, Razorpay, and Cashfree are also part of this and accused of being shoddy.

Summering Up

The government takes serious steps related to these companies, moreover, Google also runs an authentication test for these companies and shut down the applications if any malicious thing founded.

It is all started 15 years ago, and now the revolution is building a dynamic industry in microfinance. These industries ultimately collapsed because the borrowers take multiple loans and were unable to make repayment. Many of them committed suicide and took the money.

Another consequence is that they have the details of the Aadhar card, national identity card, or pan card of more than 14 million users. They also have the information of Indian customers’ facial recognization and now working comfortably on Chinese servers and the rest of them are calling it the national security issues.