<p>Nithin Kamath, the CEO and founder of Zerodha, has cautioned his followers about the concerning emergence of “shady, illegal” digital lending applications that require wide access to users’ personal data. Speaking on X (previously Twitter), Mr. Kamath voiced his worries about the rising danger that these banking applications offer.</p>
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<p>He likened them to virtual representations of rapacious moneylenders, referred to as “Sudakhor” in Hindi. “The number of people getting fleeced by shady and illegal loan apps has gone up significantly,” he stated.<br />
“Especially if it’s a loan app, financial applications that want complete access to contacts, messages, images, and other data are cause for concern. In his X article, Mr. Kamath stated, “Many of these lending apps are digital incarnations of predatory moneylenders (known as Sudakhor in Hindi).”</p>
<p>“Many people who become entangled in the web of these applications often turn to extreme measures, including suicide. Two additional illicit lending apps appear for each prohibited one. It’s turned into a whack-a-mole game,” he continued.</p>
<p>The CEO of Zerodha outlined the warning signs related to these applications in his piece. He made particular mention of people asking for complete access to messages, contacts, and images, especially those who were lending money. Additionally, he emphasized that these behaviors are quite concerning and advised consumers to proceed with caution.</p>
<p>Additionally, Mr. Kamath revealed the strategies these applications use. “The fact that a lot of these applications take off as much as 10% up front is what disgusts me about them. Furthermore, interest rates might vary from fifty percent to one hundred percent, or even higher. People that borrow money using these applications are unable to return it on such exorbitant conditions. However, he argued that because many who borrow money through these applications are in need, they are unaware of the tiny print.</p>
<p>The creator of Zerodha continued by criticizing conventional loan sharks who use physical intimidation as a means of obtaining repayment. “These loan apps harass people by calling all their contacts and sharing private photos and lewd pictures that are morphed,” he stated.</p>
<p>In closing, Mr. Kamath raised an important query about the usefulness of these applications in relation to those who use brand-new SIM cards and phones that are empty of contacts, messages, or images. “I’ve often wondered what would happen if someone used a fresh SIM card and phone but had no messages, contacts, or images on it. If someone tried to take advantage of this mechanism, how would these applications recoup money? “These illicit loan apps don’t really report to credit bureaus,” the author stated.</p>
Nithin Kamath of Zerodha Shares Important Red Flags and Warns Against “Shady” Loan Apps
