Till Debt Do Us Apart
Outlook Money|February 2021
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.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM OUTLOOK MONEYView All

Wage Redefined, Pay Reduced

Introduction of the new wage code from April 1 is likely to affect take-home salary for employees across public and private sectors but ensure a better retirement package

5 mins read
Outlook Money
April 2021

‘Invest Across A Wide Spectrum'

Actor Masumeh Makhija believes in diversity when it comes to planning her investments

3 mins read
Outlook Money
April 2021

SEIZE THE DAY, MY FRIEND!

It’s always, earlier the better, when it comes to planning for the time after you hang up your boots. It’s a longterm proposition and is often tangled with a host of duties and dreams. Saving from an early life smoothens the job but a late-starter is certainly not a no-getter.

10+ mins read
Outlook Money
April 2021

Riding The Time Machine

Covid-19 has battered non-banking financiers, assets are in the throes of defaults, yet they have proved their resilience time and again, and crossed the bar. NBFCs – which throw the lifeline to the base of the pyramid – are fixed firmly on the ground with their unmatched ability to evolve into indispensability for the Indian economy

5 mins read
Outlook Money
April 2021

Lower Rate A Business Booster In Hard Times

Home loan interest rates have reduced over the last few months – at a time when the entire world went through one of the toughest phases. The economies have just begun reviving. A lower interest rate is the need of the hour to support the nascent resurgence in the Indian economy, says SBI Chairman Dinesh Khara in an interaction with Outlook Money. Excerpts from the interview:

4 mins read
Outlook Money
April 2021

Life Cover For Lives In The Lurch

Insurance regulator has issued a diktat for life insurance policies to cover transgenders but insurers see very few takers and buyers find the products too costly, too complex

6 mins read
Outlook Money
April 2021

It's Ease Of Doing Investments

Sebi plans to introduce regulatory-light regime with the debut of Accredited Investors in the Indian securities markets. The regulator faces a host of challenges to counter risks of investor frauds

7 mins read
Outlook Money
April 2021

Bank On Banks For The Nest Boom

BFSI stocks proved to be the best bet when everything went into a tailspin. A reviving economy pumps enough fuel in them to drive your funds to higher orbits

5 mins read
Outlook Money
April 2021

Always Invert To Get It Straight

Fill up your emergency bucket, house your interests in the investment bucket, and save in your dream bucket

5 mins read
Outlook Money
April 2021

Post Office Savings Schemes Banking On The Age

A higher risk appetite for faster and heftier returns divides India into two sections of investors. The seniors still trust the good-old Post Office Saving Schemes, while the juniors rush for new-age investment instruments.

10+ mins read
Outlook Money
April 2021
RELATED STORIES

An Exclusive Interview With Nandakumar Narasimhan

The Little Red Train

10+ mins read
Lens Magazine
March 2021

A Room for Dad

Before Mom passed, I made a promise to her

8 mins read
Guideposts
April 2021

THE DANGAL IN THE JUNGLE, PART 1

YOU KNOW YOU’RE SOMEBODY WHEN YOU’VE APPEARED ON AN INDIAN DANGAL POSTER — IN OTHER WORDS, IN A WRESTLING ADVERTISEMENT.

6 mins read
Black Belt
April/May 2021

WOUNDS AND THE WOMB

JULIE PETERS explores how to heal a relationship with the sacred womb, a place of death, life, and possibilities.

8 mins read
Spirituality & Health
Mar/Apr 2021

BE SQUIRRELY

Giant squirrels, giant lessons? Animal chaplain SARAH BOWEN explores what squirrels can show us about mindfulness.

4 mins read
Spirituality & Health
Mar/Apr 2021

E8 Caste and the Indian Tech Ivies

IIT grads are highly sought after in Silicon Valley. Are they bringing deep-rooted prejudices with them?

10+ mins read
Bloomberg Businessweek
March 15, 2021

Life Changing

I was happily married, happily employed, just plain happy. Until the accident

8 mins read
Guideposts
February 2021

IN SEASON Chickpeas (GARBANZO BEANS)

Chickpeas appear in early recordings in Turkey well over 5000 years ago. India produces the most chickpeas worldwide but they are grown in more than 50 countries. An excellent source of carbohydrates, protein, fiber, B vitamins, and some minerals, they are a nutritious staple of many diets. The name chickpea comes from the Latin word cancer, referring to the plant family of legumes, Fabaceae. It is also known by its popular Spanish-derived name, the garbanzo bean. Kidney beans, black beans, lima beans, and peanuts are other familiar foods found in this legume family.

1 min read
Alternative Medicine
February 2021

When the Signal Goes Out

Government-ordered internet shutdowns are becoming more frequent

3 mins read
Bloomberg Businessweek
February 15 - 22, 2021

Giving More, Taking Less

FRANCOIS BOUDERLIQUE learnt about the basic principle of Nature – to give more than you take – when he left a high-powered banking job in Paris to live and farm in Kutch, India. He realized that his understanding of eco farming was colored by his past and he needed to open his eyes to a new reality.

3 mins read
Heartfulness eMagazine
February 2021