The center is examining several fintech or fintech companies that have ties to China, according to media reports. The development comes after India banned 177 Chinese applications after the border clashes in June 2020. This means your loan app could join the list of China-based mobile apps banned in India. This raises two concerns for users: the risk of a data breach and the collection of outstanding loans.
As fintech and lending apps access sensitive information, including account details, the ban could put both your money and data at risk. A few months ago, Indian intelligence agencies flagged the apps banned over user security and privacy concerns, according to reports.
Pravin Kalaiselvan, president of BombayUser rights campaign group Save Them India Foundation said a public interest litigation (PIL) had been filed with the Supreme Court, calling for an investigation of 212 apps with direct or indirect links to the China. “In some cases, the app may be owned directly by a Chinese company, but the investments are redirected through another channel,” he said.
App-based lenders have come under fire for using coercive recovery techniques since foreclosure. Borrowers reported that some lenders were abusing permissions granted when the app was installed to access personal data and contacts, and threatening to call them (read bit.ly/345tl33).
The main complaint is that these apps use sensitive data for loan collection. “There is a strong possibility that some apps will be banned even if customers have outstanding loans because sensitive data is at stake,” Kalaiselvan said.
But what if an app with which you have an open loan is banned?
According to Sameer Aggarwal, founder and CEO of RevFin, a digital lending fintech, to work here, these apps must partner with downstream non-bank financial companies (NBFCs) to disburse the loans.
“These apps typically offer short-term loans (seven to 21 days) with small bills (below ₹20,000), but these are usually fully secured by Chinese fintechs, so there is no credit or fraud risk for NBFCs. If some of these apps are no longer allowed to run, since most loans are short-term, they will likely be picked up before fintechs go out of business. If they are not, they will be reimbursed by Chinese fintechs, ”he said. While applications may not have enough time to get borrowers back, they should be concerned about the credit rating if the loan is not repaid, Aggarwal added. .
Loans can be repaid directly to the NBFC. “If the borrowers face other problems, they can write to the financial mediator appointed by RBI,” he said.
If you anticipate debt collection or credit score issues after an app ban, find out which NBFC the app in question is supported on and contact them.
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