While 58 per cent of citizens said when they or someone in their family/ household staff took a loan using instant loan apps in the past two years, they were charged annual interest of over 25 per cent.
Over 54 per cent of citizens surveyed experienced extortion or data misuse during the collection process, according to the report by community social media platform LocalCircles.
The platform on Tuesday wrote to the RBI Governor
According to MeitY, it has blocked 27 such fraudulent instant loan apps.
The RBI has also disallowed non-bank prepaid payment instruments (PPIs) from loading credit.
"The PPI-MD (PPI-master direction) does not permit loading of PPIs from credit lines. Such practice, if followed, should be stopped immediately. Any non-compliance in this regard may attract penal action under provisions contained in the Payment and Settlement Systems Act, 2007," according to the latest RBI directive.
The Maharashtra police cyber crime team recently wrote to Google Play Store, asking to remove 69 loan apps after receiving hundreds of complaints of harassment and threats made by fraudulent loan recovery agents to customers.
India has witnessed an emergence of instant loan providers through smartphone-enabled fintech lending companies to help people meet shortages of funds.
Some instant loan apps, according to consumers, charge as much as a 500 per cent interest rate and use extortion methods to collect money from borrowers or loan defaulters, according to LocalCircles.
"Some citizens also claim to be getting phone calls for repayment of loans taken over a year ago, even though they have paid the amount taken or more," the report mentioned.
On the other hand, there are many reports of borrowers' personal information, including
"People have also reported in a few cases, how their parents in a different location received messages about the loan payment which they had already made some time back," the report noted.
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