Small loan: A trap for the youth?

No limit for recovery agents leads to harassment then suicide. The guidelines by RBI sought to limit

- Abhyushi Tripathi

A silent crisis is playing out in the pocket of young India, not in stock markets or government treasuries, but in smartphones of college students and first-jobbers who clicked on the Apply Now button without reading the small print.

A silent crisis is playing out in the pocket of young India, not in stock markets or government treasuries, but in smartphones of college students and first-jobbers who clicked on the Apply Now button without reading the small print. A decade ago, to take a loan, you had to do some paperwork, a guarantor and perhaps visit a branch manager who knew your father. Now it requires three minutes and an Aadhaar number. Credit has become frictionless with dozens of digital lending apps, and that lack of friction is the issue. No CIBIL score? No problem. No salary slip? No problem. None whatsoever of a credit history? Still no problem. This is freedom to a 19-year-old college student in Nagpur or a 23-year-old gig worker in Bengaluru. It is, in fact, the start of a trap to many.