Experts flag dubious biz model of digital small money lending apps
Bengaluru (PTI): Digital small money lending apps backed by financial professionals are using dubious means in their business with borrowers bearing the brunt, experts have flagged.
These mobile apps offer loan of a few hundred rupees to about Rs 10,000.
"However, they hold back at least 25 per cent of the money in the name of processing fees and, further, the rate of interest is high in some cases, which is against the norm", says Bengaluru Additional Commissioner of Police, Raman Gupta.
He alleged that the role of financial professionals is shady in the operations of such kinds of instant loan apps on mobile phones.
"There is a major role of chartered accountants and company secretaries and these finance professionals in setting up such instant money lending companies. They become directors and name someone else as the operator," Gupta told PTI.
Gupta who had investigated dubious businesses of some of these mobile applications even agrees with the idea of blacklisting such financial professionals.
"The applications are developed in India and there are many software engineers here to develop it but the brain behind this business model is Chinese," he stated.
Another expert said these platforms at the time of downloading the application get access to the phone calls, photographs and videos, which are used to blackmail the borrowers.
"In some cases, these digital loan apps make a profit as high as 2,100 per cent," he said.
According to Gupta, these money-lenders hardly hire any recovery agents as they use the photographs, videos and contacts to blackmail people to cough up the amount.
"For recovery of their dues from defaulters, these digital money lending operators send messages to the contacts accessed from the borrowers' phones, use the personal photographs and videos of the borrowers and in some cases morph the photograph of the money lenders and send them to the contacts on phone," Gupta said.
According to sources in the financial sector, the dubious means of digital money lending platform have claimed many lives, especially during the height of the Covid-19 pandemic when people were in dire need of money, and unable to pay back on time.
Police sources also pointed out at various instances of people ending their lives over the matter but did not divulge any numbers.
Gupta added "the only way is awareness among people against these applications. No one should download them. Also, the digital money lending platforms should be regulated and a policy should be formulated." PTI GMS RS SA SS
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Los Angeles county wildfires could be costliest in US history, early estimates say
Los Angeles, Jan 11: The wildfires that erupted this week across Los Angeles County are still raging, but already are projected to be among the costliest natural disasters in US history.
The devastating blazes have killed at least 11 people and incinerated more than 12,000 structures since Tuesday, laying waste to entire neighbourhoods once home to multimillion-dollar properties.
While it's still too early for an accurate tally of the financial toll, the losses so far likely make the wildfires the costliest ever in the US, according to various estimates.
A preliminary estimate by AccuWeather put the damage and economic losses so far between USD 135 billion and USD 150 billion. By comparison, AccuWeather estimated the damage and economic losses caused by Hurricane Helene, which tore across six southeastern states last fall, at USD 225 billion to USD 250 billion.
“This will be the costliest wildfire in California modern history and also very likely the costliest wildfire in US modern history, because of the fires occurring in the densely populated areas around Los Angeles with some of the highest-valued real estate in the country,” said Jonathan Porter, the private firm's chief meteorologist.
AccuWeather factors in a multitude of variables in its estimates, including damage to homes, businesses, infrastructure and vehicles, as well as immediate and long-term health care costs, lost wages and supply chain interruptions.
The insurance broker Aon PLC also said Friday that the LA County wildfires will likely end up being the costliest in US history, although it did not issue an estimate. Aon ranks a wildfire known as the Camp Fire in Paradise, California, in 2018 as the costliest in US history up to now at USD 12.5 billion, adjusted for inflation. The Camp Fire killed 85 people and destroyed about 11,000 homes.
The LA County wildfires, which were fuelled by hurricane-force Santa Ana winds and an extreme drought, remained largely uncontained Saturday. That means the final tally of losses from the blazes is likely to increase, perhaps substantially.
“To put this into perspective, the total damage and economic loss from this wildfire disaster could reach nearly 4 per cent of the annual GDP of the state of California,” AccuWeather's Porter said.
In a report Friday, Moody's also concluded that the wildfires would prove to be the costliest in US history, specifically because they have ripped through densely populated areas with higher-end properties.
While the state is no stranger to major wildfires, they have generally been concentrated in inland areas that are not densely populated. That's led to less destruction per acre, and in damage to less expensive homes, Moody's noted.
That's far from the case this time, with one of the largest conflagrations destroying thousands of properties across the Pacific Palisades and Malibu, home to many Hollywood stars and executives with multimillion-dollar properties. Already, numerous celebrities have lost homes to the fires.
“The scale and intensity of the blazes, combined with their geographic footprint, suggest a staggering price tag, both in terms of the human cost and the economic toll,” Moody's analysts wrote. The report did not include a preliminary cost estimate of the wildfire damage.
It could be several months before a concrete tally of the financial losses from the wildfires will be possible.
“We're in the very early stages of this disaster,” Porter said.
