Nithin Kamath, Founder and CEO of Zerodha, has raised the alarm about the proliferation of “shady, illegal” digital lending apps that pose a significant threat by demanding extensive access to users’ personal information. Taking to X (formerly Twitter), Kamath expressed his concern over the rising menace posed by these finance apps, likening them to digital versions of predatory moneylenders known as “Sudakhor” in Hindi.
In his X post, Kamath highlighted the red flags associated with these apps, particularly those requesting full access to contacts, messages, and photos, especially when offering loans. He emphasized the need for caution and noted that such practices raise serious concerns about user privacy.
Kamath exposed the tactics employed by these apps, condemning their upfront deductions of as much as 10% and exorbitant interest rates ranging from 50% to 200% or more. He pointed out the exploitative nature of these loans, making it nearly impossible for desperate borrowers to repay under such usurious terms. Moreover, he highlighted the distressing impact on individuals who, caught in the web of these apps, may resort to drastic actions like suicide.
The Zerodha CEO also criticized the methods used by these loan apps, such as harassment through calls to all contacts and sharing private photos and lewd pictures, often morphed. Kamath strongly condemned these practices and emphasized the need for stringent measures to curb the exploitation of vulnerable individuals.
In conclusion, Kamath raised a critical question about the efficacy of these apps when faced with individuals using new SIM cards and phones devoid of contacts, photos, or messages. He questioned the recovery tactics of these apps, especially considering that many of them do not report to credit bureaus.
Nithin Kamath’s warning sheds light on the dark side of digital lending apps and underscores the importance of user vigilance to avoid falling victim to exploitative financial practices.
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