Dhani case reveals flaws in fintech model of instant success

Digital lending platforms eyeing fast growth in a hyper-competitive market seem to be skipping or bungling vital checks that are designed to protect the industry and consumers from fraud. The latest case involving Dhani, a financial services app owned by Mumbai-based Indiabulls, has brought the problem into sharp focus.

Last week, several people narrated on social media how they found mysterious mentions of Dhani in their credit reports despite never taking a loan from the fintech. The entries had affected their credit score, a sensitive measure that takes years of sound personal finances to build and only a few bad months to damage.

It appears that online tricksters stole and manipulated their PAN details to borrow small sums in multiple transactions, racking up defaults.

“When I saw the tweets, I checked my credit score and found similar entries against my PAN card. The address and date of birth, however, were different,” said Karthik Srinivasan, a Bengaluru-based communications consultant. The loans in this instance were also disbursed by Dhani.

Industry insiders say that with fintechs scaling up aggressively without full precautions, such incidents were waiting to take place. Many are baffled as to how a listed entity like Dhani Services (née Indiabulls Consumer Finance) failed to conduct thorough verification before issuing credit lines.