Digital Loan Apps: The wealthy founder of Zerodha, Nithin Kamath, compared the emergence of predatory digital lending apps to traditional moneylenders, or “sudakhor” in Hindi, and issued a strong warning about them. He underlined the risks associated with financial apps that demand a great deal of access to personal data in a statement posted on the social media site that was once known as Twitter.
Nithin Kamath’s Warning on Extensive Data Access
“Finance apps that ask for full access to contacts, messages, photos, etc. are a red flag, especially if it’s a loan app. A lot of these lending apps are digital avatars of predatory moneylenders (Sudakhor in Hindi),” he wrote. Concern over the rising number of individuals becoming victims of these apps and resorting to drastic actions like suicide was voiced by Nithin Kamath. He emphasised the widespread use of these apps in spite of initiatives to limit their use.
“The number of people getting fleeced by shady and illegal loan apps has gone up significantly. Many individuals caught up in the web of these apps frequently resort to drastic actions, such as suicide. For every illegal loan app that’s banned, two new ones pop up. It’s become a game of whack-a-mole,” he said.
Nithin Kamath Reveals Astronomical Fees and Hefty Interest Rates
The business owner also revealed the predatory methods used by these applications, such as their astronomical fees and hefty interest rates that trap borrowers in a never-ending cycle of debt. Furthermore, Nithin Kamath denounced the harassing methods used by certain loan apps, such as getting in touch with borrowers’ networks and distributing personal images that are frequently edited.
“Traditional loan sharks resort to physical threats to recover money. These loan apps harass people by calling all their contacts and sharing private photos and lewd pictures that are morphed,” the entrepreneur added.
Kamath Points Out Loan Apps’ Lack of Accountability
Kamath highlighted these applications’ failure to report to credit bureaus and questioned how successful they are against users who might evade their data collecting strategies. He encouraged people to visit the Zero1 YouTube channel to learn more about the problem.
“I have always wondered: What if someone uses a new SIM and phone with no contacts, photos, or messages? What would these apps do to recover money if someone gamed this system? It’s not like these illegal loan apps report to credit bureaus. To know more about the nuisance of these illegal loan apps, watch this full video on the Zero1 (Zing earlier) YouTube channel,” he concluded.
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