The Madurai Bench of the Madras High Court on Monday ordered notice to the Centre on a public interest litigation petition that sought a direction to the authorities to frame guidelines in order to regulate online applications offering financial and loan services.
A Division Bench of Justices R. Mahadevan and J. Sathya Narayana Prasad ordered notice on the petition filed by S. Ayyaa of Palayamkottai. He said that there was an alarming trend of people being defrauded by deceitful entities posing as legitimate financial companies.
The petitioner said that digital lending platforms are used to provide people with financing, from personal loans to business loans. With the help of the digital lending platform, people can have a more personalised approach to banking and delivery options.
However, loan frauds were being reported regularly. With the rapidly growing number of internet and smartphone users in India, the number of scams and fraudulent activities targeting them has also grown steadily.
The applications on the pretext of advancing loans access all information from the customer phones which would later be used by the company to perpetrate some other financial crime. This is how the multi-crore money lending scam in India works, he said.
In the case of loan application scams related to phishing, the most common way that people are targeted was by false representation. An individual posing as a bank or a financial service provider’s representative requests sensitive…
