Loan app scams in India: how they work and what to check

The next part of our scams series. Loan scams come in two forms. In one, an app lends you a small sum, reads your contacts and photos, and threatens everyone you know. In the other, you borrow nothing at all: someone takes a loan on your Aadhaar and PAN, and you find out when the recovery calls start. Here is how both work, and what to check on your phone and your credit report.

87illegal loan apps blocked by the Centre under the IT Act, as of July 2026
600of about 1,100 lending apps found illegal by an RBI working group in 2021
2,200+loan apps removed from Google Play in India, September 2022 to August 2023
25%of loan-app users said they look at what data an app collects before trusting it

How a loan app gets into your phone

The illegal apps work through your phone's permissions. When an RBI working group studied lending apps in 2021, it found about 3 in 10 asked for the camera, 3 in 10 for location and 1 in 5 for contacts, and that some used "entire phone contacts, media, gallery" to harass borrowers and the people they know. Tap a step to see the phone.

One instant loan, step by step

A message or ad promises money in minutes, with no paperwork. The link downloads the app directly, not from the app store.
Contacts, photos, call logs, location and camera, all before showing a single loan term. Most people tap Allow to get to the money.
A 25-year-old in Mumbai applied for Rs 2,000 and received Rs 1,300, to be repaid in six days. The threats began before the six days were up.
Recovery agents use the contact list and the photos. Even after she repaid, morphed photos of her were sent to her family, police said.
RBI's rules bar lending apps from your files and media, contact list and call logs. Camera, microphone or location may be used once, only for KYC, and only with your consent.
On Android, the Permission manager in Settings lists every app that holds each permission, and the Privacy dashboard shows which apps used one in the last 7 days. Switch off what a lender has no business reading.

Google Play has barred personal loan apps from photos and contacts since 31 May 2023. Its current policy also blocks files, precise location and phone numbers. That is why so many illegal apps arrive as a download link instead.

What the lender tells you

The second kind of app never lends at all. It "sanctions" a loan, then asks for fees. A 70-year-old in Mumbai paid Rs 1.14 crore over ten months for zero-interest loans that never came. RBI warns that illegal apps often claim a link to a real lender.

Six lines from loan apps and callers, and the truth

Checked 0 of 6. Each of these is a warning sign.

ADi WalletVerified records, shared with a yesPeople hold records fetched from the source, approve every request, see who holds what and can revoke access at any time.See ADi Wallet →

Loans you never took

The second scam needs no app on your phone, only your documents. In Delhi, police say one syndicate changed the mobile number linked to each victim's Aadhaar, then used their Aadhaar and PAN to borrow from NBFCs. The case surfaced in June 2026, when one victim started getting recovery calls for a loan he had never taken.

Follow the loan: one syndicate in Delhi

About 50people whose Aadhaar and PAN details were misused
New mobilenumbers put on their Aadhaar without their knowledge
Rs 1.6 croreborrowed in their names from private NBFCs
Mule accountsrented for a commission to receive the money
Rs 4.5 lakhin EMIs demanded from one victim who never borrowed

Source: Delhi Police, via The Pioneer, 12 July 2026

In Jaipur, a 56-year-old doctor found 36 loans worth Rs 4.37 crore on his credit report that he says he never took. In Ahmedabad, police say a gang turned victims' photos into blinking videos to pass face checks, changed their Aadhaar-linked mobile numbers, and took personal loans. There is no national count of these loans: the IT Ministry told Parliament that details of crimes using fake Aadhaar sit with the state governments. We covered how loose photocopies feed this in our photocopy guide.

Real cases, 2025 and 2026

Who was hit, and how

Pune · Jul 2025Rs 5,000 loan
A man repaid Rs 9,000, was asked for Rs 15,000 more and threatened with morphed photos sent to his contacts. Police said the racket duped over 10,000 people.
1 arrested
Mumbai · Aug 2025Rs 1,300 received
A 25-year-old repaid a six-day loan, and the app's staff still sent morphed photos to her family.
Case filed
Mumbai · Apr 2025Rs 1.14 crore
A 70-year-old paid fees for loans that never came. The seized phones were linked to 132 complaints on the national cybercrime portal.
3 arrested
Hyderabad · Feb 2026Rs 1.08 lakh
A woman told her Rs 3 lakh loan was sanctioned paid "insurance" and "TDS" charges, and never got the loan.
5 arrested
Delhi · Jul 2026Rs 4.5 lakh
A man got EMI calls for a loan taken on his PAN after the mobile number on his Aadhaar was changed.
1 arrested
Jaipur · Mar 2026Rs 4.37 crore
A doctor's credit report showed 36 loans on his PAN that he says he never took.
FIR filed

What's stopping it

What regulators have done since 2020

December 2020RBI warned the public about unauthorised lending apps and told people never to share KYC copies with them.
November 2021An RBI working group found about 600 illegal apps among about 1,100 lending apps.
September 2022RBI's digital lending rules barred lenders' apps from contacts, files, photos and call logs.
February 2023The Enforcement Directorate had identified about Rs 2,116 crore of crime proceeds in loan-app cases, the Finance Ministry said.
July 2025RBI began listing the apps that banks and NBFCs say are theirs, under its 2025 Directions.
January 2026Personal loan apps in India had to be on RBI's list to stay on Google Play.
July 2026The Centre's count of illegal loan apps blocked stood at 87.
August 2026The Home Ministry's cybercrime centre ordered Google to take down six loan apps that were on the Play Store, saying they harvested Aadhaar details and read contacts, gallery and camera. Being on the store is not proof.

Why it keeps working: the government keeps no national count of loan-app cases or money lost. Asked in Parliament in March 2026, the Finance Ministry said police is a State subject. A draft law to ban unregulated lending, released in December 2024, has not yet been brought to Parliament. And Google removed over 2,500 loan apps between April 2021 and July 2022 before the 2,200 that followed, which shows how fast they come back.

Check your phone and your credit report

Check the lenderLook the app up on RBI's list of lending apps. An app missing from it is a red flag. Being on it is the lender's claim, not an RBI approval.
Check the permissionsOpen the Permission manager in your phone's settings and look at who holds Contacts, Photos and Call logs. A loan app should hold none of them.
Check your credit reportEach credit bureau must give you one free full report a year. Bureaus must also send you an SMS or email when a lender pulls your report.
Dispute a loan you never tookComplain to the bureau and the lender. If it isn't fixed within 30 days, you are owed Rs 100 for every extra day.
Lock your AadhaarUIDAI lets you lock your biometrics and unlock them instantly when you need them. Share a masked Aadhaar where you can.
Check SIMs in your nameSanchar Saathi shows every mobile connection in your name and lets you report the ones that aren't yours.

Call 1930The national cyber fraud helpline. Report a threatening loan app or a loan you never took, and file on cybercrime.gov.in.

Both scams turn on access nobody checks: an app that reads your contacts, and documents that travel without you knowing where. ADi Wallet helps with both. Its Device section shows which permissions each app on your phone holds, with family controls, and your records are shared only with your yes, with a log of every share. Banks and NBFCs can receive identity and income proof straight from the source, with the person's consent. To see how, book a demo.

Loan app scams in India: instant loans, morphed photos and loans taken in your name

How a loan app gets into your phone

What the lender tells you

Loans you never took

Real cases, 2025 and 2026

What's stopping it

Check your phone and your credit report

Sources

More guides

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Digital arrest scams in India: how they work, what to do, and how employers can help

KYC scams that fake an identity: forged IDs, misused copies, mule accounts and cloned fingerprints