With the advent of various Instant Personal Loan Apps made available online, accessing Personal Loan has become quite easy these days. However this easy access and availability comes with its own risks that any individual should be necessarily aware about.

Instant online loan applications

A proposition of availability of hassle free app based micro finance, which does not ask for any documentation, paperwork, signatures and promises loan in matter of minutes, can be tempting for people in need of money. However they have to pull restrain and beware of the risks and dangers involved that can be life threatening too. The app driven micro lending firms mainly target the students and unemployed people who are in need of money. The borrowers should be aware that these Instant Loan Apps do not follow the rules and regulations stipulated by the RBI and have very harsh, unethical means and tactics that they employ to recover the loan from members.

What Happens 

When an individual downloads the application for accessing instant personal loan, many times they need to give permission to app. to access to their contact numbers, pictures etc., in their mobile. Though the process seems to be a hassle free, the loan providing app. generally asks for reference of aprx. 10 contact numbers. They also deduct heavy amount as processing charges before providing the loan. It is observed that in case the borrower defaults /delays the payment amount, they apply unethical and harsh pressure tactics. These tactics include sending notice or warnings to the reference contact numbers, calling and threatening the borrowers and their contacts with sever legal action and harassing them severely.


  • Accessing the contact number and picture stored in mobile  
  • Misuse of contact numbers and pictures saved in mobile
  • Excessive interest and penalties
  • Interest deducted before providing the loan
  • Constant harassment and threats
  • Online Harassment
  • Harsh and unethical means of recovery.

Modus Operandi

Step 1: Contact for personal loan

Step 2: Download of Instant Personal Loan App. with all the permissions required.

Step 3: Provide Aadhar and Pan card details

Step 4: Provide references of 10 personal contacts

Step 5: Choose a time period for repayment/ EMI.

Step 6: Delay or default in repayment leads to excessive harassment, threats, social humiliation etc.,

Step 7: Leads to stress and suicides also.

How App-Based Lenders Are Harassing, Sucking Borrowers Dry

Prabhu Mallikarjunan (The FEDERAL)

12 June 2020 

Sunil Kumar, a migrant worker from Uttar Pradesh’s Aligarh, works as a painter in New Delhi and earns around Rs.400 a day. About nine months ago, Kumar fell short of Rs.2,000 required for his brother’s treatment. Banks wouldn’t lend to him since he didn’t have a regular job. So he took a loan from Wifi Cash, an app-based platform run by Delhi-based non-banking financial 

company (NBFC) Chadha Finance Ltd. Just by submitting his Aadhaar number and photo ID and selfie. With no source of income in the wake of the coronavirus pandemic and the ensuing lockdown, Kumar was unable to pay the amount. The lending company charged him 1% every day as penalty. His overdue charges during the lockdown period shot up to Rs.9,792.

But between March and May, Kumar alleges that Wi-Fi cash accessed phone contacts (the permission to which he gave while downloading the app on his android phone), and even called up his immediate relatives. Also “The recovery agent verbally abused and harassed me over the phone and posted fake FIR copies and legal notices on WhatsApp chat,” Kumar says.

Like Kumar, there are thousands of customers who’ve fallen prey to such lending platforms which are misusing data, overcharging customers and taking advantage of the digital illiteracy

This story was published on The Federal news website on 11 June 2020

Courtesy: The FEDERAL 



How to be safe

There are hundreds of Instant Personal Loan apps listed on the Play Store. Reportedly many of them show millions of installs. Especially during the lock down period there were millions of Indians who took up to use these apps for meeting expenses. Awareness about such loan frauds can help one to prevent falling for them. Some of the major signs that may indicate fraudulent lending practices are measures to safeguard are mentioned below:

Warning Signs

  • No verification of previous repayment history
  • Creation of sense of urgency and pressurizes into acting immediately
  • Hidden or undisclosed charges/ fee amounts.
  • Unsecured websites
  • No physical address disclosed by lender

 Safety measures


Check for lenders contact information like phone number, email address and physical address.

  • Verify the online reviews by customers given for the lender.
  • Check the professional reviews on trust worthy lenders.
  • Make sure it has a Reserve Bank of India's (RBI's) mobile-only Non-Banking Financial Company (NBFC) license which allows them to give you that loan.
  • Review the app permissions regularly and give access permissions as per the purpose of the app only.



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