April 3, 2024

Digital lending scams have risen amid the Covid-19 pandemic as economic stress has caused fraudsters to prey on unsuspecting people in dire need of money. The more pressing their need for quick money, the more susceptible they are to loan scams.

A basic understanding of digital loans and their modalities could help people stay safe from frauds. Here are some important aspects to know before selecting your lender and relying on them.

1) RBI-approved

First, note that lenders should be registered with the central banking authority, the Reserve Bank of India. Lenders that are not registered with the RBI are not allowed to lend money and will not be following RBI guidelines.

Borrowers should know that all lenders implement know-your-customer or KYC norms for each applicant. Lenders who do not follow KYC rules should immediately be suspect.

On their part, customers should also do the due diligence of prospective lenders before applying for a loan. Just as lenders must know their customers before advancing a loan, borrowers should take the effort of checking the credentials of lenders to avoid being duped. This can be done by simply checking the registration status of the lender on the RBI website.

A speedy search on Google Play Store, Apple App Store and other app repositories reveals dozens of apps all promising loans instantly or within minutes. While digital innovation has made it possible for lenders to offer loans speedily, always check if the…

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