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18 May 2020

Snigdha Poonam, Business Insider

India: Instant-loan apps reportedly adopts abusive recovery practice, many companies China-owned

Chinese instant-loan apps have exploded in India. As lockdown hurts salaries, borrowers say they are threatened with violence and fake police reports over repayment, 7 May 2020

  • India's 1.3 billion population has been on lockdown since 24 March, resulting in more than 100 million people losing their jobs in April alone.
  • Figures suggest that millions of Indians are downloading instant-loan apps to make ends meet, many of which are owned by Chinese companies partnering local firms to operate in India.
  • Borrowers say they can't repay during the pandemic, and alleged they face terrifying threats over their debts. The threats include official-looking — but fake — letters, or harassing relatives.
  • CashBean, one popular loan app operated by China-owned Opera, acknowledged to Business Insider that it was investigating or had terminated employees who had violated its policies, including sending fake notices.
  • Other services approached by BI either did not respond or denied wrongdoing.
  • Google told Business Insider that it takes down instant-loan apps that operate on egregious terms, although searches on international Play Stores still show scores of these apps.

…Taking last-minute loans from private moneylenders is common in India….report...found that adults in India have an average debt of $1,345. And as smartphone usage booms, borrowers are turning to apps…"60-70% percent of micro-lending apps available in India are Chinese-owned,"… CashBean is owned by tech firm Opera, which itself is owned by a Chinese investment firm. Another app, Moneed, makes its Chinese roots explicit on its website. Mad Elephant likewise lists a Chinese director on its corporate filings. And CashBus was reported by India's Economic Times as looking to enter the Indian market...

…Indian borrowers who use these apps now say they are being threatened with shaming, arrests, credit blocks, court action, or financial penalties for not making their repayments on time. … [A]ffected borrowers appear to have little official recourse. …There is also a regulatory loophole — the Reserve Bank of India does not scrutinize these apps, …[It] has issued its moratorium on loans, but it appears to mostly be up to Google to police the apps on its store.

Google's policies don't currently allow apps with predatory lending terms onto the Play Store. But the payday apps are still clearly easy to find…. Google said Play Store has been actively monitoring loan apps and taking down those found to be breaking the rules. …CashBean spokesman said it had a "zero-tolerance policy" for violations committed by its staff. It said it had fired one employee who broke its code of conduct…