Till Debt Do Us Apart

It’s an investigation into the snare and snarl of debt, deceit, and deception. It led to the vilification of thousands of borrowers, and a dozen suicides. The regulators and industry experts were caught napping

Jyotika Sood and Prashant Srivastav

It’s a giant mobile-digital loan scandal. Like a tarantula’s, its web stretches outwards to Hong Kong, Singapore, Indonesia and China. In India, the reach is seen in several states such as Delhi, Maharashtra, Telangana, Haryana, Tamil Nadu, and Karnataka. Tens of thousands of borrowers are trapped in this net’s grip. Most were harassed, abused, and vilified, and some committed suicide. Hundreds of global and Indian companies, and thousands of thuggish recovery agents are involved in it.

Months after the scam was unearthed, the investigators were unable to put a figure on its size. In Telangana, contends Shikha Goel, Hyderabad’s Additional Commissioner of Police, ₹25,000 crore was involved, which included repeated loan deals. The state police froze ₹350 crore in 435 bank accounts. But this is only the tip of an iceberg. As the central enforcement directorate and states’ criminal investigation departments get into the act, the numbers can be five to 10 times higher.

The masterminds of the deathly rip-off are Chinese nationals, young globetrotters in their late twenties and early thirties, based in China and India. At present, five Chinese and 36 Indians are behind bars. The former include the brains behind the pains of the borrowers, and their families and friends. The 27-year-old Zhu Wei (Lambo), who was arrested at the Delhi International Airport, heads a few global companies that were involved in the fraudulent loans.

Blame it on COVID-19, which led to the loss of millions of jobs, salary cuts and delayed payments. Caught in a vicious cycle, many hungrily and desperately scrounged for help. Voila! There were hundreds of digital-mobile loan apps willing to extend money in a jiffy. A consultant in Telangana says that her first loan of ₹2,500 was transferred in 10 minutes – “no hassles, no documentation, just a few clicks to send photographs of Aadhar and PAN, followed by a live selfie.”

At this stage, the typical human traits related to desperation, greed and unusual confidence kicked in. The money was easy to get, the interest rates were high at 20 to 50 per cent, calculated on a daily or weekly basis. Fascinated by the ease of getting money, many borrowed recklessly. They took small amounts, but from as many as 50 apps. The 24-year-old Kirni Monika, who consumed poison and died, got ₹5,000 each from 55 of them. Her outstanding including interest shot up.

Others were careful; they borrowed and repaid on time, i.e. within six to seven days. But at some stage, they too got stuck, when they were unable to repay on time. Mumbai-based Prabhu Jeyabalan, 33, began his loan journey in March 2020, and easily paid back eight of them. However, in early December 2020, he was stuck with a ₹20,000 loan that he needed urgently, but could not repay. A similar thing happened with the Telangana-based consultant, who was mentioned earlier.

The borrowers didn’t realise the three tricky parts of the loans. The first was that although the money was easy, the interest rates were so high that they quickly totted up to unmanageable proportions. K Santosh, 36, who committed suicide, found that the interest on his principal amount of ₹51,000 was actually ₹50,000. KV Sunil, 28, too killed himself when his loan of tens of thousands of rupees became a non-payable amount of ₹2,00,000. The interest meter seemed unstoppable.

Second, many were caught in an initial-cozy, later-shattering debt cycle. As they repaid the loans several times within the stipulated six to 15 days, they felt comfortable. Little did they think that they would fail to do so for extraneous reasons! They were completely unprepared for such a situation. The third was the inevitable debt trap. Borrowers were asked to repay existing loans through fresh ones from other loan apps. This led to a never-ending and constricting web of loans.

However, the borrowers had no clue about the trauma they would face as defaulters. Threats, abuses, blackmail, and forged documents were used by the recovery agents of these loan apps. Outlook Money accessed screenshots of dozens of WhatsApp texts sent to the recipients. On the last repayment day, a borrower was told that “today is the last due date.” If she didn’t pay, she was informed: “you will be charged penalty,” and “you won’t be eligible to take a loan again from any Non-Banking Financial Corporation (NBFC).”

Defaulters received intimidating texts that they would be shamed in front of their families, colleagues and friends. When people downloaded the apps, they unwittingly gave permission to the lenders to access information stored on their mobiles. This included contact lists and other Internet activities like shopping and banking details. Borrowers got screenshots of their contact lists, along with coercive messages that the latter will know about their so-called misdeeds.