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Chinese instant-loan apps have exploded in India. As lockdown hurts salaries, borrowers say they are threatened with violence and fake police reports over repayment.

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  • India's 1.3 billion population has been on lockdown since 24 March, resulting in more than 100 million people losing their jobs in April alone.
  • Figures suggest that millions of Indians are downloading instant-loan apps to make ends meet, many of which are owned by Chinese companies partnering local firms to operate in India.
  • Borrowers say they can't repay during the pandemic, and alleged they face terrifying threats over their debts. The threats include official-looking — but fake — letters, or harassing relatives.
  • CashBean, one popular loan app operated by China-owned Opera, acknowledged to Business Insider that it was investigating or had terminated employees who had violated its policies, including sending fake notices.
  • Other services approached by BI either did not respond or denied wrongdoing.
  • Google told Business Insider that it takes down instant-loan apps that operate on egregious terms, although searches on international Play Stores still show scores of these apps.
  • Visit Business Insider's homepage for more stories.
On 23 March, Indian Prime Minister Narendra Modi announced a national lockdown to contain the spread of the novel coronavirus, ordering schools, offices and commercial establishments to close with immediate effect.
On 24 March, Anjali Lepcha's workplace, a beauty parlour in south Bangalore, closed down and cut off her source of income indefinitely.
The next day, Anjali began to receive phone calls and text messages from apparent strangers that got scarier as the day progressed.
More than a month later, the calls and messages are still pouring in, each saying the same thing: repay your loan or you will regret it.
Anjali first took a mobile app-based loan of Rs. 2,000 ($26) in October 2019 to contribute to her father's chemotherapy costs.
"I earn Rs. 15,000 ($200) a month, and it hardly covers the monthly expenses," she said.
Anjali has been relying on lending apps to bail her out of such emergencies with micro loans that she must repay before a week or fortnight is up. Such apps are hardly ideal, since they often involve high interest rates or ask for private data, but she didn't know of any other option.
"Before lockdown, I always paid back in time," she said.
When the lockdown struck, Anjali was approaching due dates on an accumulated loan of Rs. 30,000 ($396) from nearly a dozen apps: Momo, CashBus, Timely Cash, Y Cash, Kissht, Robo Cash, Fast Rupee, Cash Mama, and Loan Time. Business Insider has approached all of these firms for comment, but was unable to reach Y Cash.
With her pay frozen indefinitely, she is struggling to meet those obligations.
"They are abusing me day and night even as we struggle to feed ourselves and pay our rent in the lockdown," she said, alleging that recovery agents operating on behalf of the apps are harassing her.
According to Anjali, agents are also using the information she gave to harass people she knows.
"One of them said their legal team will start contacting my relatives if I don't repay the loan in an hour," she said. "This is like data hacking, because I only gave them two references as part of applying for the loan."
Anjali said she was sent screenshots of her own phone contacts. One agent, a representative of the loan app, threatened to message Anjali's contacts outing her as a "thief." The rep called Anjali's sister for repayment, and threatened bailiffs and legal trouble.
Anjali is being charged interest of 2% on one $2 loan — a small amount to the average Westerner, but the debt quickly racks up.
She said in one instance, an app representative had tried to initiate a money transfer via her Google Pay account. She was alerted to the attempt by an automated SMS asking for a one-time password to approve the transaction, and it didn't go through. But such tactics are stressing borrowers out.

Low-wage workers are a target for instant loan apps populating the app stores

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Since the lockdown, India's unemployment rate has hit a record high. More than 120 million Indians lost their jobs in April alone, according to the Centre for Monitoring the Indian Economy.
Official government numbers state that 45% of the country's working population earns Rs 10,000 ($132) or less a month, falling in the large gap between government cash transfers and formal bank loans.
Together with millions hustling in the informal job market, they make up a rich target group for one-click lending apps mushrooming over the last two years on mobile stores that give out loans ranging between Rs. 1,500 and Rs. 15,000 ($20 to $200).
Taking last-minute loans from private moneylenders is common in India, where approximately 60% of the population lives on less than $3.10 a day. A 2019 report from Credit Suisse found that adults in India have an average debt of $1,345. And as smartphone usage booms, borrowers are turning to apps.
"You could see these apps as a digital version of the village moneylenders," said Mrin Agarwal, founder of financial education firm Finsafe India.
There are no exact figures for the number of Indians borrowing via digital means. But data from AppsFlyer showed India had the highest number of installs for lending apps in the Asia-Pacific region in 2020 so far. The venture capital tracking platform Traxcn reportedly estimates that there are 484 alternative lending startups currently operating in the country. More than a hundred apps are offering payday loans in India, and many of them show more than a million installs.
If you type "loan" on Google's Play Store in India, the results run for pages and pages — Cash Mama, Cash Papa, Cashe, Cash House, Flash Cash, Cash Now, Cash Pot — with many of these apps showing million-plus downloads within just months of launching.
CashBean
Similar apps are also present on Apple's App Store — WiFi Cash, Cash Now, Early Salary, Billion Cash — even though iPhones are typically unaffordable for their target group.
The process of applying to these apps for a micro loan is simple, though anyone trying to find out more about who runs them will find information lacking.
"60-70% percent of micro-lending apps available in India are Chinese-owned," explained Dhiraj Sarkar, an executive with a Chinese fintech firm that runs a payment gateway in the Indian market.
Sarkar explained that foreign-owned apps operate in India by partnering with a local entity that holds a license to issue loans and carry out other financial activities, known as a non-banking finance corporation or NBFC.
"To operate in India, they either partner with a financial entity that has an NBFC license or they buy one — it could even be a chartered accountancy firm — and hire an Indian director who gets paid to mark his signatures," he said.
For example, CashBean functions in India through PC Finance; WiFi cash on App Store through Chadha Finance; and Cashcred and Cashin on Play Store through Rhino Finance.
That several of these apps are Chinese-owned is not a secret. CashBean is owned by tech firm Opera, which itself is owned by a Chinese investment firm. Another app, Moneed, makes its Chinese roots explicit on its website. Mad Elephant likewise lists a Chinese director on its corporate filings. And CashBus was reported by India's Economic Times as looking to enter the Indian market.
Others, such as Kissht and Early Salary, are Indian companies.
In their descriptions on mobile stores, these apps claim to play fair: a minimum loan cycle of 60 or 90 days, security of user information, and fixed interest rate of 33-36%. But the claims remain just that.
Like payday loan apps anywhere, those functioning in India target borrowers on the lower end of the earnings scale, and their numbers are growing. Figures from Indian credit information company CIBIL reportedly revealed that 44.8 % of new borrowers during the quarter ended June 2019 were in high-risk categories, up from 36.4% in 2018.

The pandemic means borrowers can't meet their debts — and the apps are turning nasty

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Backed by documents and screenshots shared with Business Insider, Indian borrowers who use these apps now say they are being threatened with shaming, arrests, credit blocks, court action, or financial penalties for not making their repayments on time.
For the most part, these are empty threats. But borrowers say they are being sent official-looking fake documents which fill them with terror, such as FIRs [Indian police reports], legal notices, court summons, downgrade alerts from credit-scoring services and even signed and stamped warnings from the Reserve Bank of India. Business Insider has seen copies of some of these documents.
Lenders don't seem to be taking the pandemic into account.
"Today, a lot of them who take loans are under the impression that they don't have to pay back. They want the government to bail them out. But from the position of the lender, if I have given out money, I expect people to pay it back," said Finsafe India's Mrin Agarwal.
Shortly after the national lockdown, the Reserve Bank of India (RBI) advised banks and NBFCs to maintain a three-month moratorium on loan recollection.
"When the RBI imposed that rule, the lending apps became very sceptical about their survival. With so many people losing jobs, they are faced with a huge risk of non-repayment," said Dhiraj Sarkar.
As the lockdown stretches on, the stress to repay is building. "The micro-finance institutions are in the game knowing the situation. If loan default happens in this scenario, it will happen en-masse," said Sathyan David, a former chief general manager of the RBI.

On 16 April, a major Indian news channel, Zee Business, broadcast the contents of a sting operation conducted to expose the aggressive recovery campaigns run by micro-lending apps such as CashBean, Y-Cash, OCash and Wifi Cash.
In the following days, thousands of borrowers posted their experiences and evidence of harassment by multiple apps using the hashtag #haftavasooli (extortion) on Twitter; many of them signed up on Twitter just to add their screenshots and audio clips.
A borrower named Shekhar Verma uploaded a taped conversation in which a man who claims to be an agent of the Play Store app Moneed threatens to shoot him if he fails to repay his loan of Rs 1,500 ($20).
Harpreet Singh shared a selfie that he had uploaded to the Mad Elephant app as part of the loan application which was sent to his contacts with the number 420 (the section in Indian Penal code that deals with cheating) scribbled across it.
Many of them shared with Business Insider a forged letter allegedly from Opera's CashBean app notifying them that "RBI will freeze your bank account, and you will be arrested."
Business Insider confirmed with the RBI that it did not send letters to borrowers on behalf of lending apps.
Some savvier customers know the letters are fake.
"I immediately noticed that the top part of the letter carried the CBI (Central Badge of Investigation) emblem and the bottom part, RBI's emblem," said Pravin Kalaiselvan, a Mumbai-based travel entrepreneur.
"But I am well-educated and politically aware, which other people may or may not be," he added.
More alarming to Kalaiselvan is that recovery agents got hold of his relatives' contact details and then harassed them.
He continued: "On March 10, I had taken a Rs. 15,000 ($200) loan from CashBean, and I was going to repay it on time, but before the due date, my father gets a call from them about recovery. I was speechless. How did they get his number? He wasn't among the two references I provided to them. They are misusing the permissions I gave the app."
For now, affected borrowers appear to have little official recourse.
Some of the borrowers we spoke to successfully filed police complaints about recovery agents' behavior, but as yet there is no evidence of large-scale police or government response.
There is also a regulatory loophole — the Reserve Bank of India does not scrutinize these apps, because they operate through the licensed local partners, per Livemint's reporting. The RBI has issued its moratorium on loans, but it appears to mostly be up to Google to police the apps on its store.
Google's policies don't currently allow apps with predatory lending terms onto the Play Store. But the payday apps are still clearly easy to find and deleting them is like a game of whack-a-mole.
Shaktikanta Das
A Google spokesperson for India said Play Store has been actively monitoring loan apps and taking down those found to be breaking the rules.
"Our Google Play Developer Policies are designed to protect users and keep them safe, and we recently expanded our Financial Services policy to help protect people from deceptive and exploitative personal loan terms. When violations are found, we take action," he added.
Meanwhile, in its "fair practices code" for NBFCs, the RBI has clear instructions for how not to recover loans: "Training to field staff shall include programs to inculcate appropriate behavior towards borrowers without adopting any abusive or coercive debt collection / recovery practices", " no penalty charge on delayed payment", and "an" assurance that the privacy of borrower data will be respected."
When contacted regarding this article, RBI's supervision department for NFBCs said the borrowers should send their complaints through the relevant portal featured on its website.
Anjali, meanwhile, is still struggling to file a police complaint.
"I walked to the nearest police station, but I was told to go to the crime branch across the city, but how would I go there in lockdown when auto rickshaws aren't running," said Anjali.
For now, she said, she has found a lawyer online whom she paid a fee of Rs 700 ($10) to talk to the recovery agents in legalese.
According to former recovery agents who spoke with Business Insider, some of these companies are operating freestyle.
"Not all recovery agents know the NBFC recovery rules. Some agents don't even know what they are doing," said Gaurav (who gave only his first name) , who worked at China-owned CashTok until two weeks ago when he was fired. "All we knew is that we were working for a Chinese company."
He added that his former employer got removed by Google, then made a comeback. "Earlier the app was called CashMax, but when it was suspended from Play Store because of complaints three months ago, it came back as CashTok."
Gaurav said that salaries ranged between Rs. 12,000 and Rs. 20,000 ($158 and $264) and that many staff were put on unpaid leave when lockdown started.
"Those of us who spoke of a strike were terminated. Some remained just to get a month's salary before facing the uncertainty of the lockdown, but even they are feeling the company's recovery tactics are too much," he said.
"Their idea is to get back twice the loaned amount," said Pankaj (who only gave his first name) who joined CashTok's recovery team three months ago and was terminated recently. "But the brunt is faced by the agents who are forced to communicate with hundreds of borrowers every day using their own phone numbers. Now we are out of jobs. There should be a helpline for us."

One app said it had fired or investigated employees for policy violations

In a lengthy statement to Business Insider, a CashBean spokesman said it had a "zero-tolerance policy" for violations committed by its staff. It said it had fired one employee who broke its code of conduct, and had instigated proceedings against other employees who sent fake letters to borrowers. The firm said it respected customers' privacy and only contacted customers on their own phone numbers, or an emergency contact number.
The company said it was waiving late repayment penalties on loans between the beginning of March and the end of May as well as a moratorium on repayments until the end of May.
The spokesman said: "We reiterate that the company strictly prohibits use of any illegal/unethical methods as part of the debt collection practice, including use of forged documents, impersonation of government officials."
In a lengthy email, Moneed said its recovery agents did not harass or threaten borrowers. It did say it sent "kind reminders" about repaying loans on time. It also denied sending fake threatening letters, but did acknowledge sending "some company resolutions and legal notices to some people who have been threatening our company... via emails and social media."
Moneed said it had introduced measures to support borrowers during lockdown, such as loan extensions and cancelled penalty payments for anyone whose loan is due during lockdown.
CashBus likewise denied wrongdoing in a statement to Business Insider.
This article will be updated as and when other companies respond to Business Insider's request for comment.
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