Welcome to the 159th edition of The Pattern, where we dive into the latest from the world of finance and technology. This week, we're talking about something that's been festering in the shadows of India's digital ecosystem for years and why the government has finally decided to swing its legislative hammer. 

There's a war happening on your phone. Every day, millions of Indians open app stores looking for quick loans. What they find instead is a carefully orchestrated trap that has claimed over 8 million victims and counting. The weapons? Fake loan apps with names like CashPocket, SunGold Loan, and KCPL Rupee Personal Loan. Names that sound credible enough for any layman not to think twice before applying.  The ammunition? Desperation, sophisticated digital marketing, and regulatory loopholes are wide enough to drive a truck through. 

Consider this: a young engineering student downloads what appears to be a legitimate lending app. Within 72 hours, a ₹8,000 emergency loan morphs into ₹1.2 lakh in demand. The harassment machine kicks into gear: morphed photos sent to family WhatsApp groups, threatening calls at 2 AM, messages to employers. The psychological warfare doesn't stop until the victim either pays up or breaks down completely. 

This isn't an isolated incident. It's a business model. 

The Government of India seems to have had enough. The Banning of Unregulated Lending Activities (BULA) Bill, set to be introduced in the upcoming monsoon session of Parliament beginning July 21, 2025, isn't just another regulatory document. It's a declaration of war. Ten years in prison. A huge sum of ₹1 crore in fines. The government is making it clear: the party is over! 

But how did we get here? How did India's app stores become digital hunting grounds where predators could operate with such brazen confidence? 

The answer lies in a perfect storm of technological advancement and regulatory lag. While legitimate fintechs were busy building compliance frameworks and working with established NBFCs, scamsters discovered that they could create a professional-looking app, spend ₹50,000 on Facebook ads, and reach 100,000 desperate borrowers before anyone noticed they existed. 

The math is terrifying. On July 10th, 27 of the Top 200 Finance Apps in the Apple App Store were fraudulent ones. That's 13.5% of the most visible and downloaded financial apps on the platform. And this is the state of Apple’s store which is known for being cleaner, safer and generally more stringent in terms of allowing developers in. When users searched for "instant loan," they weren't finding solutions; they were walking into digital quicksand. The scale of this deception became clear when it was found that for every 10 apps removed, 10 new ones would appear within days. 

Source: Babu 

These aren't amateur operations. Scamsters have mastered app store optimisation better than most legitimate companies. They burn through marketing budgets and spend heavily on user acquisition. Some operate from China, Hong Kong, and Nigeria, treating India's regulatory gaps like a business opportunity written in gold. 

The human cost is staggering. Independent investigations have documented 60 suicides directly linked to loan app harassment between 2022-2024. ₹9,200 crore vanished into this digital black hole in 2024 alone, with complaints spiking 34% year-on-year. But the real damage goes deeper: 17% of victims lose access to formal credit permanently; their CIBIL scores destroyed by loans they never properly understood. 

This is where people like Babu Lal enter the story. An engineer who started tracking suspicious apps as a side project, he's identified and reported over 22,000 scam apps across eight countries in less than two years.  

His work reveals the industrial scale of this operation: apps that go from zero to 100,000 downloads in five days, developer accounts that impersonate everyone from RBI subsidiaries to listed NBFCs, and advertising networks that somehow can't tell the difference between a legitimate lender and a digital extortion racket. 

But individual heroes fighting systemic problems can only do so much. The real inflexion point comes when governments decide enough is enough. 

The BULA Bill represents exactly that moment. Unlike previous regulatory responses that targeted symptoms, this legislation goes after the disease itself. Any lending activity not explicitly authorised by the RBI or other statutory regulators becomes illegal. Not just discouraged. Not just fined. Illegal, with criminal penalties. 

The bill's scope is comprehensive. It covers digital lending, traditional lending, and anything that "directly or indirectly promotes, operates or issues any advertisement regarding such unregulated lending." The penalties escalate based on the severity of the offence. Basic unregulated lending: two to seven years in prison. Coercive recovery methods: up to ten years.  

The message is unmistakable: if you're going to prey on desperate Indians, you're going to face consequences that match the damage you cause. 

What makes this particularly significant is the government's priorities. The BULA Bill may be fast-tracked over the Insurance Amendment Bill, which would raise foreign investment caps from 74% to 100%. When a government chooses citizen protection over foreign capital, you know the problem has reached a tipping point. 

The fake loan app ecosystem has thrived by exploiting a fundamental mismatch. Millions of Indians need quick credit but can't access formal banking. Technology has made it possible for anyone to create an app that looks like a legitimate financial service. Regulatory gaps ensured that by the time authorities noticed, the damage was done. 

The BULA Bill aims to close that gap permanently. But legislation alone won't solve this overnight. It needs enforcement mechanisms that can match the speed of digital fraud. It needs app stores to take responsibility for what they are hosting. Most importantly, it needs a financial ecosystem that can provide legitimate credit to the millions of Indians who currently have nowhere else to turn. 

The war for India's digital lending space is entering its final phase. For too long, it's been the Wild West, where predators could operate with impunity while desperate Indians paid the price. The BULA Bill represents the moment when the sheriff finally arrived in town.  

That's all for me this week. As always, here are some reading recommendations below. 

Reading list 

1. 1. Balancing Regulation and Accessibility: Addressing Unregulated Lending in India with a Comprehensive Approach 

2. 2. Fake Loan Apps List In India | 400+ Apps - 2025 

3. 3. The Trap: India’s Deadliest Scam: How predatory loan apps drive the poor to death 

Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues. 

Cheers,  Mayank