Ms Chetna Kadu panics every time her phone rings.

For three months now, she has been receiving calls from unknown numbers at all hours of the day and night and her WhatsApp is inundated with ungrammatical messages in capital letters threatening to send her to jail.

All of them demand the immediate repayment of a loan of 15,000 rupees (S$276).

"How can I repay the loan when I haven't been paid my salary for three months?" the 32-year-old accountant in a Mumbai restaurant asked.

As hotels and shops across India closed on March 24 and economic activity collapsed under a two-month lockdown ordered by the government to battle the Covid-19 pandemic, Ms Kadu, like millions of other Indians, lost her job.

With no income and an ailing mother to care for, she was forced to dip into her meagre savings.

Five days after the lockdown, a 15,000 rupee loan that she took from Cash Bean, an online lending application, came due. Saddled with an interest of 33 per cent a year, she owed the lender 16,737 rupees. As if that was not enough, she has had to bear with sleepless nights and relentless phone calls since.

Hundreds of people like Ms Kadu have taken to social media in the past three months to complain about such cyber bullying by app-based lenders.

They say loan collection agents hurl expletives on repeated calls and texts, send fake legal notices and police reports, and call the borrower's contacts to shame them.

India has more than 430 lending apps whose names are wordplays on money, such as Cash Bean, MoneyMore, CashBus, Kissht, CashMama, iCredit, FlashCash, iRupee, mPokket, KreditBee, and HappyLoan. They offer high-interest, short-term "hassle-free" loans starting from as little as 1,500 rupees to individuals and small traders.

To lend, the apps must be tied up with a non-banking financial company (NBFC) registered in India. But the apps themselves are often start-ups with skeletal teams and no regulatory oversight.

Most online lenders charge 25 per cent to 40 per cent interest (banks charge 12 per cent to 20 per cent). Their websites claim a repayment tenure of 30 to 90 days, but over 60 e-mails and screenshots reviewed from borrowers of 14 different apps showed tenures of seven or 15 days.

After downloading the app, borrowers submit their unique digital ID number, taxpayer ID, mobile phone number and a selfie or video for verification. They must give the app full access to their contacts and call logs.

"In less than half an hour, I had the money," said Ms Priyanka Sharma, who is in cosmetics sales in Mumbai and took 6,000 rupees from iCredit on March 15. Unable to repay the amount after she lost her job, she has received harsh calls and is now considering pawning some gold to end her ordeal.

Ms Mrin Agarwal, founder of finance education organisation FinSafe, said: "Despite the cost and risk, these apps are often the only option for low-income Indians and students who won't get bank loans without collateral."

Many borrowers take loans from multiple apps and use one to pay off the other.

During the pandemic, there has been a sharp rise in both borrowings and defaults.

"Compared with the period before the lockdown, delinquency in April, May and June is 10 times higher. So, we stopped disbursal of new loans around early April and have started only in a small way now," said Ms Ilica Chauhan, vice-president of compliance and partnerships at PC Financial Services, the NBFC under which Cash Bean is registered.

India's central bank asked lenders to offer a moratorium on loan instalments till Aug 31. But Ms Kadu has been refused any extension.

"In genuine cases, we provide moratoriums. But there are many who have cash flows but have no intention to repay," Ms Chauhan said.

Many borrowers are now receiving threats and abuse.

Mr Akash Kumar, a 24-year-old from Raigarh, said FlashCash agents have called his labourer father and several friends. "They told them I have run away with money. I was so humiliated and sold my phone to repay 3,000 rupees."

Yesterday, the central bank announced tighter rules for digital platforms, responding to complaints about "exorbitant interest rates, non-transparent methods to calculate interest, harsh recovery measures, unauthorised use of personal data and bad behaviour".

The apps now have to disclose the names of the NBFC they partner, issue loan-sanctioning letters on the NBFC letterhead, and adhere to fair practices while recovering dues.

Experts say the ongoing coronavirus pandemic is a good time to rethink the lending model of fintech companies.

"Do apps need more regulation? Or should they change some practices? Fifteen-day tenures and over 30 per cent interest are designed to make the borrower fail," said Mr K.J. Shashidhar, a financial technology expert at Observer Research Foundation.

Ms Agarwal hopes regulators will do more, such as capping interest rates. But much of the answer, she believes, lies in intensive investor education about the risks involved.