Staying Ahead Of Crisis Predators

Staying Ahead Of Crisis Predators

Explained: Loans that secure you versus prey on you

Any crisis is an opportunity for us to find our strength, experience and wisdom to survive through it, often thrive as well. A crisis is also often a means to predatory ends, where scammers and fraudsters take advantage of our fear for their selfish gains. Consumer scams and investment frauds were rampant in previous crises including the 2008 global recession. Unfortunately, the COVID-19 pandemic too, was no different.

Stories of many individuals falling prey to an increasing number of fraudulent instant loan apps have been grabbing news headlines. In an official release recently, the Reserve Bank of India (RBI) also cautioned the general public against several unauthorised lending platforms and mobile apps that promise quick loans[1].

It is important for us to therefore, understand why such regulatory scrutiny is required to weed out malicious scammers and fraudsters, and how you can distinguish the good from the bad.

Financial freedom vs debt traps

If you have been following our news and blog posts, you may have already come across stories of inspiring people in rural India taking control of their lives with a bit of financial support on the True Balance app. Throughout the same pandemic, we have also seen so many stories about financially vulnerable people being defrauded by loan companies that demand customers to repay loans by harassing them. Google also reported having removed many such loan app-based lenders that dubiously collect their information in violation of privacy laws.

So how do you distinguish the source of financial freedom from a trap of financial ruin? Here are some key factors that can help you make the right call.

  • Government recognition: Before plunging into rash decisions with any loan, borrowers need to ensure that the lender is a recognized entity by the government. True Balance for instance, is a ‘digital lending platform’ is an RBI authorized Prepaid Payments Instruments issuing entity.
  • Registered office: Just like lenders need to know the proof of our address, borrowers must also confirm on the registered addresses of lenders. For example, True Credits has a registered office at Gurugram, Haryana, and also has a ‘certificate of registration’ from the RBI to conduct business as an NBFC (Non-Banking Financial Institution).
  • Compliance: Borrowers need to know that the lender is compliant with Foreign Direct Investment (FDI) laws and follows legal practices. Both True Balance and True Credits for instance, neither have direct investments from China, nor any relation to illegal apps recently reported in the media.
  • Transparency: It’s important that your lender lets you know the terms and conditions of the relationship before you opt for a loan. A lender also must follow the best practices to ensure that the borrower does not already have a stressed credit profile, and can pay off the loans with ease. Which is why with a ‘Fair Practices Code’, True Balance and True Credits ensure that all interest rate, tax policies, charges and more, are easily visible, accessible, and are transparently offered upfront in the True Balance app.

Respect and ethics: A financial relationship between a lender and a borrower is a professional one, and must never lead to personal harm or injury, emotionally or physically. In fact, it is unlawful for collection agents of banks or lenders to resort to unsolicited calls, disrespectful

  • behaviour or unethical access of contacts for collection. True Balance has a ‘zero tolerance’ policy for violation of this code by its personnel and authorized collection agents.

Doing the homework

However difficult life is made by a crisis, rushing our decisions and falling to predatory traps make it even worse. Not unlike the pandemic-induced sanitary habits (such as washing hands regularly, wearing a mask, carrying a hand sanitiser etc.), it is therefore important for borrowers to also independently do some background homework, before accepting loans from suspicious companies.  


Start with ours! Rest assured, you will find our app on the Google Play Store.

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