Imagine finding out that you have defaulted on a loan you never even took out. That is exactly what happened to multiple individuals The MMS spoke with them, which includes Bollywood actor Sunny Leone, a police constable in Jaipur, a senior journalist, and a professional data scientist etc.
For all of them, these ghost loans reflected in their credit reports, and in Leone’s case, it even caused her credit score to go down by 20%. At the center of this fast growing menace of fake loans is Dhani, the lending arm of the Indiabulls Group. The 3-year-old lender claims to have disbursed Rs 3,470 crore in loans, but despite the significant volume, the lender’s know-your-customer (KYC) processes are anything but watertight and appear to have enabled notable amounts of fraudulent activity.
Dhani isn’t the only lender that has fumbled mandatory processes, with similar complaints also being raised against Arth Digital—Paytm’s lending partner.
While some users have been able to get their credit reports rectified since, the scourge of fraudulent loans speaks to the multiple fault lines that plague the KYC procedures followed by India’s fast growing fintech sector.
Fintechs also have to strike an appropriate balance between being too risk-averse and too reckless. But the real cost of his fraud is borne by users, as it may mean being denied a loan or being charged a higher rate of interest.
In our today’s newsletter, we meticulously details the causes and effects of this menace and how resolving it will be a key element of ensuring consumers trust the ballooning gamut of digital lenders.
