HOW USURIOUS LENDING APPS SURVIVED RBI'S CRACKDOWN

Despite heavier scrutiny, the high-cost lending market has adapted rather than disappeared

- Salman Hameed

Sairam Krishna, a 38-year-old information technology (IT) solution architect from Mumbai, with a salaried job of ₹30 lakh a year, isn’t the stereotype of a payday-loan borrower.

But after a medical emergency in 2023, he found himself trapped in the quagmire of short-tenure digital credit.

“I have four elderly people in my household. I am the only earning person. My wife doesn’t earn. And I have a kid as well,” Krishna said, describing the pressures that pushed him toward such borrowings.

For him, the path into payday credit did not begin with fringe apps, but with more established loan-search platforms. After browsing a popular web bazaar for loans and finding that mainstream lenders rejected him, he began getting offers from payday lenders.

What began as a stop-gap soon turned into a rollover cycle—he took one loan to close another, with fresh offers arriving as each due date approached.

By January this year, the arithmetic had collapsed. Krishna said his monthly repayment burden had climbed to more than ₹3 lakh a month even though his take-home pay was below ₹2 lakh a month, a mismatch that captures how quickly these short-tenure loans can spiral once borrowers begin stacking them. To be sure, all his lenders had spelt out clearly terms including interest rate, but the speed at which it ballooned is what was dizzying.

A few days after deciding he could no longer keep pace with the stack of loans, Krishna enrolled with debt-resolution platform SingleDebt. By then, his total dues across lenders had climbed to a staggering ₹49 lakh.

The IT professional turned to the platform after months of intimidation from recovery agents had begun to consume his working life. Some agents showed up at his home and one lender emailed his workplace, copying the chief financial officer of his organization.