Centre’s Probe Against Chinese Entities Linked To Loan Apps In Final Stages

Tightening its noose around Chinese loan apps, the Ministry of Corporate Affairs’ investigation against several such entities for alleged violations are at an advanced stage.

As per PTI’s report, quoting an official, some of the cases are currently being probed by the Serious Fraud Investigation Office. The ministry has initiated its probe after it got complaints from the Reserve Bank of India (RBI) and the Ministry of Electronics and Information Technology (MeitY) on the alleged frauds committed by such entities. 

Last month, it was reported that the Ministry of Corporate Affairs was considering cancellation of registration and freezing accounts of Chinese loan app operators if probe shows that they had committed fraud.

The report also said that the ministry is currently investigating 665 Chinese companies. 

This comes close on the heels of finance minister Nirmala Sitharaman asking key decision makers RBI Governor Shaktikanta Das, SEBI’s (Securities and Exchange Board of India) chairperson Madhabi Puri Buch, and Ministry of Finance’s Chief Economic Adviser Dr. V. Anantha Nageswaran, among others, to up their vigil in containing the spread of unauthorised online lending apps during the 28th Financial Stability and Development Council (FSDC) meeting.

The ongoing investigation is a part of the government’s bid to curb the operation of illegal Chinese loan apps in the country. In October 2022, the Enforcement Directorate (ED) had investigated links to such entities by searching five office premises across Bengaluru, including that of fintech major Razorpay, Paytm, and Cashfree. 

The probe was initiated due to unauthorised lending apps helmed by Chinese nationals forging KYC documents of unsuspecting Indian nationals and using it to appoint these Indians as dummy directors of firms. 

The government’s multiple crackdowns on unauthorised lending are yet to deter such illegal entities’ operations in India. These entities ride the wave of the increasing appeal of digital lending space in the country.  

This is despite many reports of digital lending apps offering loans to individuals at exuberant interest rates that have emerged in the recent past. After disbursing loans, these entities utilise predatory money recovery tactics which has also triggered a few people to commit suicide in the past as well.