Shares of Indiabulls-owned Dhani tank 20%

Shares of Indiabulls-owned Dhani Services tanked 20% on Tuesday, hitting the lower circuit for the second consecutive day.

The financial services company’s stock, which touched a new 52-week low of ₹82.80 on BSE, has plummeted nearly 40% in the last two trading sessions.

This comes at a time when the digital lending app is facing the ire of several social media users who have alleged about unaccounted loans appearing in their credit history.

Fraudsters seemingly used forged permanent account number (PAN) and Aadhaar card details of people to avail instant loans from the Dhani app. Aditya Kalra, a Reuters journalist in India, was among those who found out that a personal loan was disbursed on his PAN number by an imposter.

In a series of tweets Kalra pointed out that the imposter had used a fake PAN card which had his PAN number. “First, the fake PAN. Nothing other than name and PAN number is real here. No, my father’s name was not Shambhu. And I was born in 1985, not 2001. And this is not my photo or signature. Is this photoshopped simply?,” he tweeted.

He further claimed that a fake Aadhaar card was also used to avail the loan. “The photo, date of birth, Aadhar number are all incorrect. I am redacting the number anyway. Only thing used here which relates to me is the name. The Bihar address too is wrong, of course,” he tweeted. Kalra added that Dhani has registered a police complaint with all docs.

Emailed queries sent to Dhani did not elicit any response.

The company offers credit from ₹10,000 up to ₹5 lakh via its digital card. Those who avail a loan can instantly use the disbursed amount for online transactions.

The digital lending market in India -- defined as cases where loans are sourced, underwritten and sanctioned digitally -- was estimated to be worth ₹2.7 lakh crore as of March 2019 and is expected to grow up to ₹15 lakh crore (at a five-year CAGR of 41%), accounting for nearly 16% of retail lending in FY24, according to a report by PwC.

In November last year, the Reserve Bank of India’s (RBI) Working Group report on digital lending, which covers online platforms and mobile apps, recommended that “all loan servicing, repayments, etc. should be executed directly in a bank account of the balance sheet lender and disbursements should always be made into the bank account of the borrower. However, borrowers having only PPI (pre-paid instruments) account and no bank account can be disbursed loan if the PPI accounts are fully KYC compliant.”

The central bank had further suggested that digital lending applications should refrain from employing predatory lending practices that push the borrowers to unsustainable levels of personal debt. “Reckless lending in the digital realm has been perpetrated in equal measures by lax pre-agreement borrower assessment policies of lenders, including but not limited to their failure in establishing/assessing consumer credit worthiness, and current state of indebtedness.”

Flagging aggressive advertising by digital lending apps, RBI had said that ads coupled with instant disbursements, “can also lure some customers to borrow recklessly for consumption/ life-style needs”.

There were around 1,100 lending apps available for Indian android users across more than 80 app stores from January 1, 2021, to February 28, 2021, according to the report.