Loan fraud alert: 5 crucial financial safety lessons students must learn after two accused are arrested in Salem
A recent loan fraud targeting unsuspecting college students in Salem, Tamil Nadu, underscores how seemingly harmless and lucrative financial offers can lead to serious complications, exposing individuals to unexpected debt and legal trouble.
Having clarity on how this fraud occurred and on ways to avoid such scams can go a long way towards protecting the finances of students and graduates.
Two people have been arrested by the authorities for allegedly conning students by utilising their personal details and identity documents to facilitate unauthorised fraudulent loan transactions.
According to a report by The Hindu, two individuals identified as K Kannagi, aged 45, and her accomplice, Muthukumaran, aged 36, were arrested by Salem City Central Branch police.
Kannagi allegedly approached unsuspecting students. She claimed to run a ‘trust’ and promised to credit ₹1 lakh into their bank accounts. She assured the students of ₹1,000 as commission for transferring the funds to an account she provided. Trusting her, the students followed the instructions and shared their Aadhaar details and eventually transferred the funds after receiving them.
However, a few days later, they received official notices from banking institutions explaining that ‘cattle loans’ had been sanctioned in their names and that they were liable to pay the pending instalments to ensure compliance and clear out the debt.
When the students contacted the accused, they were threatened with serious consequences. Currently, the police are investigating the case and probing the possible involvement of banking officials.
Rohit Mittal, Director, Market Planning, Financial Crime Compliance, LexisNexis Risk Solutions, explained this aspect in detail, stating, “For students and young individuals, an offer of easy money or a quick commission can seem harmless. However, fraudsters can exploit this trust to misuse personal identity details and banking credentials, potentially leaving individuals liable for loans or transactions they never knowingly authorised."
He further added, "Individuals should be cautious about sharing identity documents or allowing their bank accounts to be used for transactions on behalf of others. For lenders, robust identity verification must go beyond document checks to establish genuine customer consent and assess multiple risk signals, including device, behavioural and transaction patterns. This can help identify suspicious applications and prevent identity misuse while ensuring genuine borrowers are not unnecessarily inconvenienced.”
In light of this incident, here are some important financial safety lessons students can learn to stay away from scamsters.
You should ensure that for easy cash or funds, you never discuss, disclose, or share your confidential details, such as Aadhaar card data, PAN information, bank account number, OTPs, ATM PINs, or credit or debit card CVVs, with any third party. If shared, these details can be misused to carry out unauthorised transactions, commit identity theft, obtain unauthorised loans, and engage in other similar fraudulent activities. Such details should only be disclosed and shared with verified banking institutions when requested and other similar authorised platforms only.
Promises and assurances of easy money for receiving, retaining, and transferring funds can easily expose students and their families to fraud or even leave their accounts vulnerable to money-mule operations and fraud schemes. Therefore, never fall for such greedy offers and transfer any money on behalf of an unknown individual.
When you receive such lucrative loan offers, make sure you thoroughly verify that the lending institution, bank, or financial institution is legitimate. For this, you should visit the official website of the relevant lender, rather than trusting intermediaries or individuals who claim to represent trusts and organisations. Do remember that the official loan document will prevail in the event of any dispute or discrepancy, not the verbal assurances provided by intermediaries.
Your signature holds immense value. It should be utilised carefully. Make sure that you never sign on blank forms, share personal information, details, or confidential documents without understanding their objective or provide consent for unfamiliar financial transactions. Go through loan agreements, repayment stipulations and account statements diligently.
If you discover any suspicious activity, unauthorised loans, or suspicious bank activity, do not panic. In such cases, reach out to your banking institution quickly, raise a formal complaint and report financial cyber fraud through the national helpline number 1930 or the official cybercrime portal.
The key takeaways for students and day-to-day financial services users are that basic financial literacy is as critical as academic education. Students should never forget that easy-money promises can carry hidden risks, and that protecting their identity and banking credentials is indispensable for safeguarding their financial future.
Shivam writes on personal finance, equity markets, and mutual funds. He has previously contributed to several leading publications, including Moneycontrol. He can be reached at shivam.shukla@htdigital.in
Get Latest real-time updates
Catch all the Instant Personal Loan, Business Loan, Business News, Money news, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
HomeMoneyPersonal FinanceLoan fraud alert: 5 crucial financial safety lessons students must learn after two accused are arrested in Salem
✕
Wait for it…
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.