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Telangana: Cops invoke Nizam era money lender’s Act against loan apps | Hyderabad News

HYDERABAD: To check loan app companies from harassing the public, cops have decided to book them under money lenders’ Act for running business in the state without licence.
Following a complaint by an IT worker that she was threatened with morphed nude photos and made to pay Rs 2.4 lakh for a loan of Rs 40,000, Cyberabad police invoked the Nizam-era law and filed a case under the Telangana Money Lenders Act against Wonder Loan, Cash Advance, Hand Loan and Winter Loan.
The Act initially formulated during Nizams’ rule, was later adopted in united Andhra Pradesh and subsequently in Telangana. Money lenders Act has also been used by states against Kabuliwalas who were then predominantly into loan-sharking.
“We have earlier used Telangana Money Lenders Act in the Old City against several ‘pahelwans’ who charged high interest. As per Section 3 of the Act, no person shall do money lending business without licence from government. It is an offence punishable with six months’ jail or fine. This act can be used against loan app companies,” said Vuppu Bala Butchaiah, legal advisor to Cyberabad police.
Cyberabad police have also added charges under the IT Act, criminal intimidation and insulting the modesty of woman against the loan apps apart from money lenders Act.
The 28-year-old software professional, a resident of Madhapur, had lodged the complaint on August 25.
‘Paid 6 times the borrowed amount, but still harassed’
She had downloaded Wonder Loan, Cash Advance, Hand Loan and Winter Loan and taken instant loan of Rs 40,000 at different intervals, Cyberabad Cyber Crime PS inspector K Srinivas said.
In her complaint, she said that after loan app executives began harassing her with messages and threats, she paid about Rs2.4 lakh between July 17 and August 22.
“But even after paying six times the borrowed amount, they didn’t stop the harassment and forwarded morphed nude images to my contacts,” she said.
While Cyberabad cops have invoked the money lenders Act, Rachakonda police are yet to do so. On August 18, after a complaint from a resident of Ghatkesar against Rupee Way, Rachakonda cops booked a case only under IT act and IPC sections.
The victim said that app executives forced him to pay Rs 6.4 lakh.
Most of these loan app companies are being directly controlled by Chinese funds, according to investigation by the Enforcement Directorate (ED).
“Various fintech companies backed by Chinese funds have agreements with NBFCs for providing instant personal loans ranging from 7 days to 30 days… It was projected that NBFCs had hired fintech companies for customer discovery, but in reality they were piggybacking on the NBFCs’ licence for lending business, the Enforcement Direcotrate said.
“A very high rate of interest and steep late fee were imposed. While fintech apps made most of the profits, NBFCs gained a commission for letting them use their licence,” the ED said.
All decisions regarding interest rate/processing fee/ platform fee were taken by the fintech companies working on instructions from the operators in China and Hong Kong, the ED investigation has revealed.

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