24 Dec 2020: Harassed by loan sharks, debtors commit suicide, unearthing multi-crore scam
The unfortunate demise of three people in Telangana, allegedly due to harassment of loan sharks, led police to unearth a multi-crore scam.
Promising hassle-free loans via mobile apps, some companies had been preying on naive customers for a long time.
After an investigation was launched, Hyderabad Police froze 75 bank accounts holding Rs. 423 crore. 17 people have been arrested as well.
Here's what went down.
Scam: Apps, not approved by RBI, lent money, charged exorbitant interest
This scam pertains to app-based loans, some of which charged an interest rate of up to 35% interest from customers.
Telangana DGP's office claimed that there are at least 60 such apps available on Google Play, which don't have the requisite permission from RBI.
As per officials, these companies employed youngsters in their call centers and taught them the act of luring customers.
Complaint: Complainant revealed to police how he was cheated
Cyberabad Police got a whiff of the scam when a complainant approached them.
The person revealed he downloaded an app named Cash Mama in January 2020 and availed a loan of Rs. 5,000. After deducting GST and processing fee of Rs. 1,180, his bank account was credited with Rs. 3,820.
He was given a window of seven days to repay the loan.
Documents: He took six loans, money was credited after deductions
The complainant also said he had to upload his documents like Aadhaar card, PAN card, self-authenticated photo, three months bank statement, etc. to be eligible for the loan.
After the first loan, he took six loans from Cash Mama over a period of eight months.
Though his total loan amount was Rs. 30,000, the person got Rs. 20,000 after deductions.
Harassment: Company threatened him with dire consequences, harassed him incessantly
Further, the complainant said he paid Rs. 29,000 to the money-lending company, but they still demanded more. He was asked to pay Rs. 8,634 more.
Soon, the company's employees started threatening him prompting him to inform the police.
Subsequently, an FIR was registered under IPC Sections 420 (cheating), 506 (criminal intimidation), Section 66 of the IT Act, and relevant sections of Telangana Money Lenders Act.
Raid: Upon investigation, police learned that NBFCs were also involved
Thereafter, the Cyberabad Police raided the premises of Onion Credit Private Limited and Cred Fox Technologies Private Limited, eventually arresting CEO and Director K Sarath Chandra, two directors, two collection agents, and a team leader.
Police Commissioner VC Sajjanar said both companies, founded by Chandra, joined hands with nine Non-Banking Financial Companies (NBFC) for "acquiring customers, marketing, checking creditworthiness, loan origination, disbursement, and collection."
Repayments: Companies divided customers into buckets, revealed top cop
Sajjanar also shed light on the modus operandi of these companies.
He revealed that they split customers into buckets — those who repay loans on the due date made it to the D-O bucket.
S1 bucket consisted of those who delayed payments by three days, those who paid after four to ten days were put in the S2 bucket, and so on.
Fact: Customers were harassed depending on the bucket they were in
"To recover the loan from customers they practice different methods depending upon the bucket they are in, lesser the day after the due date, lesser the treatment otherwise treatment will be very harsh, threatening and abusive," the senior police officer said.
Accounts: Two accounts were used to receive and disburse money
During the investigation, it also came to light that the companies had two bank accounts.
In one, money from NBFCs was pooled and disbursed to customers after deductions. The money which customers repaid was collected in the second account.
Eventually, police learned that the suicides of three people, including that of a jobless techie and an agriculture extension officer, were linked to this scam.
Raids: Different locations in Hyderabad and Gurugram were conducted
Reportedly, police conducted three raids in Hyderabad and two in Gurugram, where call centers were being run to harass the loan defaulters.
The call centers were linked to four companies namely Liufang Technologies Private Limited, Hotful Technologies Private Limited, Pinprint Technologies, and Nabloom Technologies Private Limited.
Registered in Bengaluru, these companies hired college graduates as telecallers for Rs. 10,000-15,000, reports NDTV.
Details: The handlers of callers gave instructions from Indonesia
Further, Sajjanar disclosed that this operation was not restricted to India, the callers took instructions from their bosses in Indonesia. He also hinted at the involvement of people from China.
"This was also indicated during an investigation into the multi-crore color prediction gaming App scam where crores of rupees were transferred to shell companies which were registered as NBFCs," he was quoted by IE.
Warning: RBI issued a warning against providers of hassle-free loans
After the scam was unearthed, RBI asked individuals and companies to remain cautious of companies that promise seamless loans. People were also warned about unauthorized digital payments.
"These platforms charge excessive rates of interest and additional hidden charges, adopt unacceptable and high-handed recovery methods, and misuse agreements to access data on mobile phones of borrowers," the country's apex bank said on Wednesday.