Micro-lenders targetting jobless youth, needy students? Take guard

Financial urgencies make jobless youth and gullible students more vulnerable. Micro lenders are always on the lookout for any opportunity to trap such vulnerable sections by offering instant loans without documentation. Check whether such instant lenders have a valid mobile-only NBFC licence from the RBI or not, besides taking other precautions.

Hyderabad: A hasty decision in times of financial trouble can lead to greater loss and suffering. Those not having a regular source of income or lost employment tend to make wrong financial decisions. This is where the micro finance firms step in to prey on the vulnerabilities of needy people. Find out what precautions jobless youth and unwary students should take to avoid falling into the trap of such unscrupulous micro lenders.

Instant loan lenders are able to to draw the attention of needy youth because of the wider use of smart phones and digital media. It is impossible to get loans from banks and regular financial institutions without valid documentation. Micro lenders are not asking for any documents nor even signatures of borrowers. They create a sense of urgency among needy borrowers and force them into taking digital loans.

The first and foremost precaution that one should take when going for a micro loan is to check whether the loan app firm has got any physical address or not. Even to do business in micro finance, a firm should follow the laid down guidelines. They should also take mobile-only NBFC (non banking financial company) license from the Reserve Ban of India (RBI).

If a firm gives micro loans without the RBI license, it means there is some motive of fraud. You should avoid such lenders at any cost. It is better to safeguard and face financial problems rather than fall prey to future harassment from loan sharks. If possible, we must check whether the micro lender has a phone number or whether they have got positive reviews online.

One should think twice before downloading a loan app. They ask permission to use your personal data. Your phone number and photo will be misused. Once you give phone numbers of your references, they misuse these contacts to cause you immense social harm in future. The micro lenders target family members, friends and relatives of the borrower as well.

The instant loan creditors use another common tactic to harass borrowers by taking their aadhaar and PAN card details. They misuse your personal data and get you implicated in frauds. When in need for money urgently, one can go for an instant loan but only after verifying the credentials of the mobile loan app concerned. You must check hidden fee involved and also guard against exorbitant rates of interest that instant lenders collect.