Sairam Krishna, a 38-year-old IT solution architect earning ₹30 lakh annually, found himself trapped in payday loan cycles after a medical emergency in 2023. According to reports from Mint, his monthly repayment burden climbed to over ₹3 lakh despite his take-home pay being below ₹2 lakh monthly. By January 2026, his total dues across lenders reached a staggering ₹49 lakh, forcing him to enroll with debt-resolution platform SingleDebt. The crisis began when mainstream lenders rejected him, leading to offers from payday lenders through established platforms like Paisa Bazaar, which eventually spiraled into a rollover cycle where he took one loan to close another. As reported by Mint, Krishna explained that "I have four elderly people in my household. I am the only earning person. My wife doesn't earn. And I have a kid as well," describing the pressures that pushed him toward such borrowings.
The Reserve Bank of India has spent the past four years tightening oversight on digital lending following complaints about instant-loan apps, coercive recoveries, and opaque pricing practices. As reported by Mint, the first major scrutiny began around 2020-21 when dozens of apps linked to Chinese operators were removed from app stores. RBI subsequently issued digital lending guidelines in September 2022 requiring upfront key fact statements, clear disclosure of annual percentage rates, direct flow of funds, and greater accountability for lending service providers. In October 2024, RBI directed DMI Finance, Navi Finserv, Arohan Financial Services, and Asirvad Micro Finance to temporarily stop loan sanctions over material supervisory concerns, with restrictions later lifted in phases. According to Mint, Navi Finserv's restrictions were lifted in December 2024, while curbs on Arohan Financial Services, DMI Finance and Asirvad Micro Finance were removed in January 2025.
Despite app store bans, predatory loan apps have adapted their distribution methods rather than disappearing entirely. According to interviews with debt-resolution platforms and fintech executives reported by Mint, operators now use web apps, mirror sites, fresh app listings, and WhatsApp-led acquisition funnels. Tanish Sharrma, co-founder of BillCut, noted that many operators run multiple apps simultaneously, re-list products under new names, or move borrowers toward APK downloads and browser-based onboarding. As reported by Mint, "The shift for such payday loan apps is in distribution of such apps outside the established app store ecosystem." Ritesh Srivastava, founder of debt-settlement platform Freed, said distressed borrowers are still routinely discovering such products through social-media advertising and search-driven marketing. "If you are desperate, you will find it," he said, describing how borrowers searching for emergency liquidity are targeted with "instant approval," "low Cibil accepted," and "money in 10 minutes" messaging. A handful of apps surfaced repeatedly in Mint's review of instant-credit advertisements across Instagram, Facebook and Google Search, with borrowers frequently routed to web flows linked to entities including Solomon Capital Pvt. Ltd (app name: Bharat Loan), Devmuni Leasing & Finance Ltd (Loan112/Rupee 112), R K Bansal Finance Pvt. Ltd (Ram Fincorp), DSG Investments Pvt. Ltd (Flot Loans), and Unifinz Capital (Lendingplate).
Despite RBI's regulatory framework requiring transparent disclosure of annual percentage rates, many high-cost lenders remain non-compliant. As reported by Mint, of five loan apps tracked, four do not fully factor upfront processing fees and GST into net payable amounts, understating borrowers' true cost of credit. Ram Fincorp offers a 26-day ₹30,000 loan with ₹3,540 in upfront charges, totaling ₹41,340 in repayment with an APR of over 600%. Industry data shows digital NBFCs accounted for 78% of sanctioned personal loans in the first nine months of 2025-26 but only 19% by value, indicating the market operates on high volumes of small-ticket credit. The stress remains concentrated in sub-₹10,000 loans, with fintech lenders reporting 4.1% of outstanding dues in the 31-90 days past due bucket as of June 2025. According to Mint, when the RBI purged predatory loan apps from app stores, the market didn't vanish—it evolved. "That is why unit economics on small-ticket loans are so tough," said Aditya Kumar, former co-founder of digital lender Niro, warning that some players use higher costs as cover to charge excessive rates.
The shift in distribution has complicated enforcement as RBI regulates banks and NBFCs but not app stores or ad-tech platforms directly. According to legal experts cited by Mint, regulated lenders remain responsible for conduct of outsourced distribution partners. Shatrajit Banerji, partner at Cyril Amarchand Mangaldas, explained that "An app (developer) by (itself) cannot start lending directly to consumers. Only a regulated entity such as NBFC can actually disburse the cash to the borrower's account." The economics of small-ticket lending remain challenging due to high acquisition and underwriting costs, with lenders facing higher costs for thin-file or high-risk borrowers regardless of loan size. Kundan Shahi, founder of Zavo, said the economics look very different at small ticket sizes because the cost of acquiring and underwriting each borrower remains high even when the loan amount is only ₹10,000. Ananth Shroff, co-founder of digital collections platform DPDzero, noted that recovery costs on distressed small-ticket loans can quickly become disproportionate to loan sizes when borrowers juggle multiple repayments. The tension between market-priced subprime lending and concerns around exploitative repayment structures has increasingly moved to the centre of India's unsecured digital credit debate.
