Multi-crore Loan App Scam: Hyderabad police freeze 75 bank accounts, RBI cautions public

The Hyderabad Police has freezed 75 bank accounts, holding Rs 423 crore, in regards to a multi-crore money lending, loan app scam. As such, the Hyderabad and the Cyberabad police have also arrested 17 people – 11 from Delhi and Gurugram, and six from Hyderabad. 23 cases has been registered against the instant loan companies.

The multi-crore scam came to light after three people killed themselves because of alleged harassment from the debt collectors. Investigations revealed that several call centres were set up in both Hyderabad and Gurugram, from where callers harassed the people who had taken loans. The police said more than 1,000 people were employed in three such call centres. The mobile apps included Dhana Dhan, Cash Mama, Cash Up, Mera Loan, Cash Bus and Loan Zone. According to Telangana DGP’s office, at least 60 such loan apps were available on Google Play Store, and were not registered by the Reserve Bank of India. Officials said the scam involved about 30 mobile apps, with the companies charging as much as 35 per cent interest.

VC Sajjanar, Cyberabad Police Commissioner, said the companies divided the customers into different buckets and practiced different methods to recover the loan. “Lesser the day after the due date, lesser the treatment, otherwise treatment will be very harsh, threatening and abusive,” he said. “They also access the contacts of relatives and friends of the customers, and send them WhatsApp messages, defaming the defaulter.”

Officials, as per NDTV, said the call centres employed hundreds of youngsters trained to lure customers, entrap them into borrowing successive sums from multiple apps, and were trained to “abuse, defame and blackmail” the defaulters in order to recover the borrowed money and interest.

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Meanwhile, the RBI has warned the public not to fall prey to the growing number of unauthorized digital lending platforms and mobile apps. The central bank, in a release, pointed out that there have been reports about individuals and small businesses falling prey to such authoritized platforms and apps which promise quick and hassle-free loans. It said reports also refer to excessive rates of interest and additional hidden charges being demanded from borrowers; adoption of unacceptable and high-handed recovery methods; and misuse of agreements to access data on the mobile phones of the borrowers. The RBI cautioned members of the public to not fall prey to such unscrupulous activities and verify the antecedents of the company or firm offering loans online or through mobile apps.

It asked customers to never share copies of know your customer (KYC) documents with unidentified persons or unauthorized apps and report such apps and bank account information associated with the apps to concerned law enforcement authorities.