Illegal loan apps operating from other countries have caused losses of Rs 800 crore in Kerala through fraud, blackmail, and even suicides, according to the cyber police. The rackets primarily target women and economically weaker sections, trapping them in a cycle of debt and harassment.
Modus operandi of the loan app rackets
These apps lure victims with quick, unsecured loans and minimal documentation. Once a borrower installs the app, it gains access to contacts, photos, and other personal data. If repayment delays occur, the operators use this data to blackmail the victim, often sending morphed images or threatening messages to family and friends. Many victims, unable to bear the harassment, have attempted or committed suicide.
According to the cyber police, the apps are designed to charge exorbitant interest rates and hidden fees, making repayment impossible. Borrowers who initially take small loans quickly find themselves drowning in debt, sometimes borrowing from multiple apps to pay off others.
Scale of the problem in Kerala
Kerala has witnessed a surge in such cases over the past year. The Rs 800 crore figure represents the total amount lost by victims across the state, including money paid as interest, penalties, and extortion. The cyber police have registered over 2,000 complaints related to illegal loan apps in 2026 alone.
Many victims are from rural areas and belong to low-income households. Women are particularly vulnerable because the blackmail often involves threats to release intimate images. In some cases, families have sold assets or taken out legitimate loans to pay off the illegal debt.
Challenges in enforcement
The cyber police say that tracing the operators is difficult because most servers and call centers are located in countries like China, Cambodia, and Myanmar. The apps frequently change names and are promoted via social media and messaging platforms. Even when identified, international cooperation is slow.
In response, the Kerala Police have set up a special cyber cell to monitor and take down such apps. They have also launched awareness campaigns, advising people to only use RBI-approved lending platforms. However, the problem persists due to the anonymity offered by the internet.
Impact on victims and society
Beyond the financial loss, the social and psychological impact is severe. Many victims have reported depression, anxiety, and social ostracization. The Kerala government has started offering counseling services through district mental health programs. But stigma often prevents victims from coming forward.
The cyber police urge anyone facing harassment from loan apps to report immediately at the cyber crime portal or helpline 1930. They also recommend not sharing sensitive data with unknown apps and to verify the app's registration before downloading.
As the illegal loan app menace grows, Kerala authorities are pushing for stricter regulations and better international coordination to dismantle the networks behind these crimes.
