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Bollywood actor Sunny Leone is not a loan defaulter, but her credit report says otherwise.

Ironically, Leone found this out while applying for a loan. “We bought a home last year, and as bank [home loan] rates had dropped, we were exploring a new bank,” recounts Daniel Weber, Leone’s husband and manager. Among the documents required for the loan was Leone’s credit report, which revealed that Leone had outstanding dues from a Rs 2,000 ($27) loan disbursed by Dhani, the lending arm of the Indiabulls Group. The loan had been availed some four to five months prior.

This blemish on her credit report saw Leone’s credit score dip by as much as 20%, Weber told The Ken, despite always having had “amazing credit”.

The only thing that linked Leone to the loan was her name and PAN number. Other details needed to take a loan—such as her address, phone number, email ID, date of birth, and bank account details—were incorrect.

Leone is one of the more high-profile instances of Dhani’s ghost loans but she’s hardly the only one. Data science professional Zubin Mehta came to know of a ghost loan taken in his name when collection agents showed up on his doorstep, demanding he repay Rs 1.3 lakh ($1,740) he supposedly borrowed from Dhani. And while both have since had their credit reports rectified, a growing chorus of users have raised similar complaints against Dhani.

These issues are something of a rude awakening for four-year-old Dhani Services which claims to have lent to 3.5 million borrowers over the past year. Primarily focused on borrowers who are new to credit, it has disbursed close to Rs 3,470 crore ($464.5 million) in credit. These complaints, however, raise question marks about the company’s lending practices—particularly, its Know Your Customer (KYC) processes. (We’ve written about Dhani’s questionable questionable The Ken Buy now, worry later: the Indiabulls Dhani spin on lending Read more business model in the past).

Sloppy and broken KYC processes have the potential to lead lenders down a rabbit hole of bad loans. And, as we’re starting to see with Dhani, plenty of legitimate credit seekers can also get caught in the crossfire. These people could see their credit scores impacted, resulting in higher interest rates or even becoming ineligible for credit, all because of a ghost loan haunting their credit report.

Dhani, for its part, maintains these are all cases of identity theft. However, while that may be the case, it’s the company’s lax KYC processes that enabled these alleged bad actors to take loans with falsified IDs. Even though the majority of Dhani’s users choose to do their KYC validation using Aadhaar Aadhaar Aadhaar Aadhaar is a 12 digit identification number issued by the Unique Identification Authority of India on behalf of the Government of India.

AUTHOR

Arundhati Ramanathan

Arundhati is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She writes the newsletter Ka-Ching! every Monday. She lives in Bengaluru and has spent over 12 years reporting and writing on various subjects.

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