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Xiaomi will offer personal loans in India, but it will cost you your privacy

China’s Xiaomi is all set to capitalize on its dominant position in India’s smartphone market by offering loans to consumers — but there’s a significant catch: The company will mine private data from your phone to determine whether you’re eligible.

According to a Reuters report, Xiaomi will soon begin offering loans of up to 100,000 rupees ($1,400 U.S.), with interest rates starting at 1.8 percent under a service called Mi Credit. The service is expected to go live within the next couple of weeks, though a Xiaomi spokesperson told Reuters it’s been already made available to select users in a beta phase.

Xiaomi commands more than a quarter of India’s total smartphone market share, so there’s a fairly positive chance the candidate might have a Xiaomi phone. The company will take advantage of its widespread presence in India by tapping into loan applicants’ phone and siphoning up sensitive data, such as messages from banks, to determine credit scores.

Customers signing up for Mi Credit will have to agree to give the company unfettered access to their personal information, “including professional and educational background and information related to use of certain apps and websites.” We’ve asked Xiaomi for additional details on what would disqualify someone for a loan and will update this story when we hear back.

Xiaomi recently came under fire for showing in-software ads across its own homegrown Android skin, MIUI. The privacy concerns and invasive data collection have cost Xiaomi one potential bank partner in Indonesia. The company sells its affordable phones on razor-thin margins, so it makes sense that its trying to expand toward more profitable services like banking.

Since the Mi Credit app will initially go live on Xiaomi’s own Mi app store, it won’t be affected by Google’s restrictions on personal loan apps.

India is no stranger to apps covertly scanning users’ phones for credit scores. A HuffPost probe highlighted how an app people used for streaming devotional songs was harvesting sensitive user data in order to stitch together financial profiles.

Mi Credit isn’t Xiaomi’s first foray into the Indian finance sector. Earlier this year, the Chinese company introduced its peer-to-peer digital payments app — based on the Indian’s government national payment interface, UPI.

India’s financial technology ecosystem is teeming with new players entering the field, and the industry is forecast to reach $1.41 trillion by 2022. A number of leading payments platform have introduced their own take on personal loans in the last year. including Alibaba and Softbank-backed Paytm.

But that most likely won’t affect Xiaomi, which has grown into a household name in the country. The company has managed to find success in several industries other than smartphones: Its line of smart televisions rose to the top of the charts in a matter of months, and it also sells Mi Sports shoes, backpacks, and more.

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Shubham Agarwal
Shubham Agarwal is a freelance technology journalist from Ahmedabad, India. His work has previously appeared in Firstpost…
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