How to stay safe from loan recovery agents? Here is the expert view

HYDERABAD: The number of people taking loans from the mobile app-based instant loan providers increased after the pandemic. The ease with which lending apps provide loans and the time that it saves has made them the most sought-after. And the business thrives precisely on this weakness of the end user.

The instant online loan providing trade is booming but along with it, the harassment by the loan recovery agents is also increasing by the day. Recovery agents have many weird tricks up their sleeves: They blackmail, threaten and humiliate the borrowers by public shaming. In some cases, their family members too.

Cyber Crime officials have expedited the process of tracking loan app agents after a spurt in harassment cases. There are dime a dozen incidents where people -- unable to bear the torture -- were driven to suicide. As the latest trend shows, even the associates of ministers and former ministers are being threatened by these agents.

In a recent case, 17-year-old Jasthi Haritha Varshini in Andhra Pradesh ended her life. The Class-12 topper, in her suicide note, blamed the loan recovery agents and their harassment as the sole reason for her extreme step.

Andhra Pradesh Director General of Police (DGP) Kasireddy Venkata Rajendranath Reddy, speaking on the incident, said that three managers and four recovery agents were arrested in connection with the case. Two main suspects, Pawan and Sai, were found to have humiliated the family members of Haritha as part of their loan recovery tactics. The police were also questioning the manager of the loan app's recovery unit in Begumpet of Hyderabad. Reportedly, they have another office in Mogalrajapuram of Vijayawada. The DGP said that stern action would be taken and they would collect all the information including the mobile calls history.

The Reserve Bank of India (RBI) is also preparing strict guidelines to prevent such cases. According to its banking regulations, debt recovery agents, whether government or private, should not use physical force, verbal threats or harassment for recovery. They are not authorised to make phone calls before 9 am and after 6 pm. Indulging in or threatening with physical, mental or verbal assault for loan recovery falls under the definition of harassment. Threatening relatives, friends or co-workers without informing the borrower at the person's home or office is also considered as a case of harassment. It also covers the use of threats or abusive language.

According to Hyderabad Cyber Crime ACP KVM Prasad, the major reason for the recovery agents taking to harassment was because of the access they get to all the data pertaining to the borrowers. It includes their contact list, Aadhar and PAN numbers and even selfies. While the gullible borrowers make it easy for the recovery agents by parting with their sensitive data and even giving app permissions, the former make use of them to resort to blackmail and harassment when there is a delay in loan repayments.

There have been cases where users were blackmailed and threatened with their selfies or WhatsApp profile pictures that were morphed into explicit pictures. The Cyber Crime ACP said that these app agents did not work locally and they operated from places like China, Nepal or Bangladesh, making it difficult for the police to catch the agents.

KVM Prasad said that the police identified 314 such loan-giving mobile apps and a report was sent to Google asking it to remove these apps from the Play Store. The tech giant is also asked to provide the details of the app makers. In addition, the bank accounts where the money was being sent to have also been identified.

To avoid getting into this type of trouble, the Cyber Crime ACP advised the general public to opt for loans from only government and credible private money lending institutions which have proper legal procedures rather than going for these quick loan providing apps.

Speaking about recovery agents from banks, a senior bank official said that if a loan recovery agent is bothering a person, then they should immediately inform the bank. He said that there were certain repayment terms which could help the person in case the bank is informed about their financial situation. If the complaint lodged with the bank is not resolved within 30 days, a representation can be made to the Banking Ombudsman. A complaint can also be filed with the RBI. This may lead to severe punishment and fines imposed on the recovery agent.