In recent years, digital lending in India has grown rapidly, driven by the proliferation of loan apps that promise quick and convenient access to credit. These platforms cater especially to individuals who may be excluded from traditional banking channels or require immediate financial assistance. While digital lending has expanded financial inclusion, it has also given rise to predatory practices, exploitation, and borrower harassment. Reports indicate that vulnerable groups such as small traders, students, and daily wage earners are disproportionately affected, with extreme cases leading to severe financial distress and even suicide. This study examines the dark side of digital lending in India, focusing on the strategies employed by certain loan app operators to recover debts unethically. By analyzing the practices of these platforms and their impact on borrowers, the research highlights systemic gaps in regulation, oversight, and borrower awareness. The study underscores the role of technology not only as a facilitator of convenient financial services but also as a tool that can exacerbate financial vulnerability when left unchecked. By shedding light on these challenges, the study aims to inform the public, policymakers, and regulators about the potential risks of unregulated digital lending. The findings emphasize the need for stronger regulatory frameworks, consumer protection measures, and public awareness campaigns to prevent exploitation and ensure that digital finance contributes positively to financial inclusion without trapping borrowers in cycles of debt. This research contributes to understanding India’s emerging credit crisis, demonstrating the importance of balancing technological innovation with ethical lending practices and societal well-being.
Anirudh Kumar Sharma (Tue,) studied this question.