It was a normal day in the Panditi household. On December 16, software engineer Sunil Panditi was getting ready for his first day at a new job while his wife Ramya Sri was bathing their young son. Sunil was expected to leave the house by 10am, instead he texted his new boss that he wouldn’t make it into work. Shortly before 1.30pm Panditi went to his bedroom and took his own life, unable to forget the string of messages that had haunted him for the past week.
The 28-year-old, who lived on the outskirts of the Indian city Hyderabad, had taken out Rs 70,000 ($956) in loans from at least 35 instant loan apps over six months after losing his job during the pandemic. As the date to repay each of his microloans inched closer, he started borrowing from one app to repay the others, but kept falling short. Each deadline piled on more stress. Things got so desperate that he secretly started using his wife Sri’s phone to borrow money.
Two days before his death, Sunil had landed a new job. He thought he would be able to pay off his debts and move onto the next phase of his life. But debt collectors from one of the apps installed on his wife’s phone accessed her contacts list, created a WhatsApp group, added her family members to it and started shaming her. Sri’s photo was posted in the group chat along with voice notes in the local language, Telugu, calling her a fraud who had failed to make loan payments. The aim was to humiliate her into paying. Sunil couldn’t stand his wife being shamed, family members say. “He couldn’t handle it, losing [his in-laws’] respect,” says Ganesh Kumar, Sunil’s brother-in-law. “It wasn’t his inability to pay that killed him. It was shame.”
Sunil is not alone. The number of instant loan apps in India, where 98 per cent of phones are powered by Google’s Android, has ballooned during the pandemic. Spurred on by a lack of government regulation and lax enforcement of policies on Google’s Play Store, millions of people have downloaded them. Now local law enforcement bodies are starting to crack down on the instant loan apps and the companies that provide them. Google is also facing tough questions from officials about how such apps were allowed on the Play Store in the first place.
A few days before he took his life, Kirni Mounika ended hers. She had taken a loan of Rs 2.6 lakh ($3,553) from 55 apps, including Snapit Loan – an app that had been downloaded more than 100,000 times by August 2020. When she failed to pay back her debts she too was publicly shamed. A message was circulated amongst her friends saying she had taken a loan from Snapit Loan and had not repaid it. It included an image of Mounika and the term ‘defaulter’ written at the top in orange. This message was sent to all the people in her contacts list. (The Snapit Loan app was removed from Google’s Play Store in November 2020. The company behind the app could not be contacted for comment).
Sunil Panditi and Mounika are among at least eight people in India who have been the victims of harassment by quick loan apps and taken their lives since November 2020.
Unlike banks or financial institutions which require stacks of paperwork, substantial collateral and take many months to approve a loan, some quick loan apps take just minutes to approve payments. The pandemic and subsequent lockdown in India led to mass unemployment with an estimated 121 million people losing their jobs – India’s GDP contracted for two successive quarters. While 70 million of these jobs recovered after the lockdown lifted, many were left with bills to pay and no money with which to pay them. With nowhere else to turn, some people downloaded scores of quick loan apps. Then the threats started.
Many of these apps provide short-term, collateral-free loans for between seven and 15 days and charge high processing fees along with interest rates typically around one per cent a day, compounding weekly. This means that interest rates can go as high as 1,000 per cent when annualised, though short-term loans don’t last that long. Many companies also ask for a range of seemingly unnecessary app permissions, including access to your contacts and your calendar, as part of the loan approval process. Some loan apps have been downloaded more than 100,000 times, others more than ten million.
As the date of repayment inches closer, collection agents start sending reminder messages. When the loans aren’t repaid, these companies typically follow a three-stage system, says Shikha Goel, additional commissioner of Hyderabad Police, who is leading investigations into the suicides linked to loan apps. Depending on how many days they delay the repayment, people are grouped into three categories. If repayment is one day late, the person will be called and asked to repay the loan. The longer the delay, the worse the harassment gets. Family and friends might receive phone calls or be added to a WhatsApp group where the person in debt is shamed. There have also been extreme cases of extortion and threats reported. “Depending on which bucket you [fall into], the way you are spoken to and the way things are handled changes,” Goel says.
Once stuck in a spiral of debt, many of the loan companies draw people in yet further. They will ask people to install a new app to clear an existing debt. In some instances, loan apps also advertise within other apps and encourage people to download their APK (Android application package), circumventing the Google Play Store entirely. This is the spiral that Sunil found himself in – after failing to pay off a small loan he was bounced from app to app, using one to pay off the debt from another. “When he would tell the service agents that he doesn’t have the money to repay, they would recommend names of different apps [owned by their companies] that he could use to borrow and repay,” says Kumar, Sunil’s brother-in-law. In June, Sunil was $68 in debt. By December, he owed $956.
Some of these apps may also have found loopholes in Google’s Play Store policies. Google’s financial services policy states that it doesn’t allow short-term personal loans – where full repayment is required within 60 days or less. To get around this, many of the loan apps say they give loans for more than 61 days. But when someone downloads them, they find out the loan must be repaid within seven to 15 days.
On January 14, Google published a blog post saying it had “reviewed hundreds of personal loan apps in India” based on reports from individuals and government agencies and said it had removed those that had violated its policies. When contacted by WIRED about this story, a Google spokesperson refused to say how many apps it had reviewed and removed. A spreadsheet created by Lakshmanan claims hundreds of financial apps have been removed in recent weeks, although it is unclear whether these have been removed by Google or the app creators.
“The apps that were found to violate our user safety policies were immediately removed from the Store, and we have asked the developers of the remaining identified apps to demonstrate that they comply with applicable local laws and regulations,” the Google spokesperson says. “Apps that fail to do so are being removed without further notice.”
This isn’t the first time aggressive loan recovery methods have been used in India. In late 2010, dozens of people reportedly took their own lives after being put under unmanageable levels of pressure by microfinance companies. What happened in 2010 is now being repeated during the pandemic – but this time it’s “on steroids”, says Lakshmanan. “People are already stressed out in a pandemic. Harassment techniques like social shaming using WhatsApp groups – which seem to be the primary driver in most cases – have led to suicides.”
Law enforcement officials in Hyderabad started looking into the apps in late November when a harassment complaint was made. Since December, when suicides were first reported, the police have arrested at least 27 people involved in the apps, including three Chinese nationals. Police have also raided call centres run by the companies across multiple cities in India.
The people arrested so far ran companies linked to 30 instant loan apps. Over the last year these apps have processed 14 million transactions worth $2.85 billion. Goel says many of these companies may ultimately be run by the same person, with teams on the ground in India reporting to an overseas boss. Police have also frozen 27 bank accounts containing a total of $13 million as part of their investigation into the suicides. “We are investigating whether this money is for loans or other things that are also happening,” Goel says. “We do expect money laundering. [We are] trying to figure out the money trail.” Police also sent a list of 158 apps to Google and asked that they be taken down. The company says it is working with law enforcement.
The scourge of predatory loan apps is not unique to India. Other low income countries, including Kenya and Nigeria, have also been targeted. Instant loan apps also soared in popularity in China in 2016. Then, students turned to borrowing from predatory loan apps, with a number of people reportedly taking their own lives after being publicly shamed. In the Chinese cases, many women were asked to share their nude pictures as collateral. In 2017 the government took action by making it illegal for companies to offer loans with annual interest rates higher than 36 per cent, among other rules. With no money to be made, many of these apps simply moved overseas. First they went to Indonesia, which, in 2019, shut down more than 800 such firms. But the loan companies simply upped sticks and moved again, this time to India.
More than two years later, regulators in India are finally taking notice. Google first took down some of these apps in November 2020. A month later, the Reserve Bank of India, the country’s central bank, issued a notice warning users of predatory loan apps. In January, the Indian central bank formed a committee to look into regulating the sector.
But experts believe that the issue will require banks, technology companies and law enforcement working together to properly clamp down on predatory loan apps. “[The collaboration] ensures that when such apps are detected there is conversation happening between these stakeholders and they can proactively monitor these apps,” says Udbhav Tiwari, a public policy advisor with Mozilla.
The problem isn’t just the sheer number of apps, but also the speed with which they can adapt. When an app is taken down, another can quickly appear in Google’s Play Store with a new name and new logo. Until proper action is taken, it seems likely that more people will run into trouble with instant loan apps. Sunil has left behind his wife, Ramya – a stay-at-home mother with no professional qualifications, along with their five-month-old son. Kumar, his brother-in-law, says these loan apps changed the family’s life in an instant and left them in disarray.
Sunil’s death has devastated 23-year-old Ramya. The couple got married two years ago and moved to Hyderabad in search of a better quality of life. Alone and with no source of income, she has been forced to leave Hyderabad and move back in with her in-laws. “Ramya really misses him,” says Kumar. “There is a big question mark on her future now.”
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