Bogus loan, KYC leak will create mistrust in fintech industry

- Out of about 1,100 loan applications available for Android users in India, 200 apps were found to be illegal.

- Fintech applications offering instant loans at high interest rates explode like a cat's cap

Fintech Industries is expanding rapidly in India and the growing acceptance of online payments from Indians is a major support. However, incidents like bogus loans, KYC data leaks have created a climate of mistrust in the fitneck industry which has hampered the growth path.

Surya Prakash Tripathi is a 40-year-old marketing professional and his CIBIL score assigned by a credit information company is mostly above 200. He received a number of credit card and personal loan offers every day. However, a few days later, he was shocked by an incident when it was reported that his CIBIL score had dropped to 40. The incident led to him being disqualified from being a guarantor in his co-worker's loan application due to his low credit rating.

Tripathi questioned the credit monitoring agencies to find out why his CIBIL score dropped. It was learned that two different loans were approved in his name through a FinTech app. Both the loans are Rs. 1,000 and due to non-payment of interest, the outstanding amount in a loan account is Rs. 10,000.

Such incidents are currently happening with many individuals and their loan application has also been rejected due to low Sibyl score. Aadhaar Card - Online financial fraud and bogus loan cases are on the rise due to leaked PAN card details.

The epidemic has led to an increase in the incidence of financial fraud

Beneficial elements went berserk during the epidemic and the number of online fraud cases has risen alarmingly. During the epidemic, when consumers could not venture out for immediate financial assistance, a large fintech application offering instant loans at high interest rates grew like a cat's hat.

According to a report by a working group set up by the Reserve Bank on the issue of digital lending, including lending through online platforms and mobile apps, there were about 1,100 loan applications available to Indian Android users alone, of which 200 were found to be illegal. During the year 2020-21, there has been a significant increase in both fraud cases with private banks and the amount involved. In the first six months of the current financial year, more than half of the reported cases of fraud were in private banks, while state-owned banks were the biggest victims. Which shows that the biggest fraud is happening with government banks.

During April-September 2021, a total of 4,031 cases of fraud were registered by Indian lenders, involving an amount of Rs 4.5 crore. While in the same period last year, Rs. A total of 2.3 crore frauds amounting to Rs 2.61 crore were committed.

The banking sector regulator said, "These developments not only hurt consumer confidence but also threaten the reputation of the financial system and pose various challenges in the form of operational risk and business risk."

In order to curb financial fraud, citizens are asked not to give out information including their bank account, PAN card, Aadhaar card to any stranger.

Incidents of bogus loans and KYC data leaks are the biggest challenge facing Fitneck Industries and need to be addressed. Without it he would not be able to win the trust of the customers. The first thing to do is to verify the identity of the customer with proof of identity. There is also a need to ensure that the privacy of data and information is not compromised or stolen.