The story of malicious lenders isn’t new. Shylock, in William Shakespeare’s The Merchant of Venice , wanted to extract a pound of flesh fro...
The story of malicious lenders isn’t new. Shylock, in William Shakespeare’s The Merchant of Venice, wanted to extract a pound of flesh from his borrower when he failed to pay. More than 400 years later, lending has gone digital, and the story repeats itself.
Digital lending platforms offer micro loans (ranging from Rs 10 to Rs 3,000) within minutes. They offer quick and easy access to credit. In a post-pandemic India, when jobs were lost and salaries slashed, these platforms became popular with many cash-strapped Indians.
Some digital lending apps, however, turned rogue. They lured borrowers into taking loans at exorbitant interest rates. And if borrowers failed to repay, they were hounded, bullied, and shamed. Reports surfaced of lenders using an array of coercive measures. Defaulters were named and shamed on social media. Their phone book access was used to spam and threaten their contacts. And some harassed borrowers died by suicide.
So how did we get here? How did this happen in broad daylight?
Regulations
Well, there are many reasons. Digital lending platforms are not directly regulated by the Reserve Bank of India. They operate in a regulatory void. In most cases they cannot lend money on their own. So, they tie up with regulated entities...
