Loan applications with Chinese links under scanner
Telangana Police wrote to the Union Home Office to investigate the transactions of around 116 apps with Chinese links that offer instant loans to Indians on attractive terms. The Center responded to that request and ordered investigative agencies like the NIA to look into the matter and demanded an explanation from Google and other web services that offer these apps.
Many companies registered in Singapore and Hong Kong are using apps and running an aggressive social media campaign offering instant loans on attractive terms to locals. However, some of the mainstays of these companies are of Chinese origin. They opened offices in India.
Over the past few weeks, hundreds of cases have been reported in the two Telugu-speaking states – Telangana and Andhra Pradesh – of alleged wrongdoing by the organizers of these apps and the coercive methods they use to collect loans.
The Cyberabad police commissioner’s office, which deals with parts of the city of Hyderabad, has recorded around 20 cases since recently.
The aggressive marketing of loans by these companies has something to do with the economic plight of people from March of this year, when the Covid-induced lockdowns hit the poor and middle classes. These companies offer loans up to Rs 50,000 without any collateral or paperwork and the money is credited to the applicants’ bank accounts the same day.
They just take the Aadhaar card and PAN numbers and of course also the bank account details to transfer the money. As there is no paperwork or cumbersome process, many people in need of cash have been benefitting from the loans since April of this year. According to Hyderabad Police, the interest rate is around 18%, but many hidden costs are collected from borrowers.
For example, a woman from Malakpet in the city took a loan of Rs 10,000 from MyInstant Money App in May, but only got Rs 8,700 after deducting processing fees and first installment interest. She, in her complaint to the police, said the full amount was repaid by the first week of November, but financiers insist she still owes Rs 7,000.
She is not alone, dozens more have come to the police and complained that the recovery agents of these apps were using abusive language and threatening them with dire consequences, unless the dues were not paid immediately. . In fact, the cases came to light after a woman in Andhra Pradesh’s West Godavari district committed suicide last fortnight while accusing a loan application.
Cyberabad Police Commissioner VC Sajjanar this week held a press conference and explained the atrocities committed by these loan collectors and called their activities totally illegal and unauthorized. They are neither the responsibility of bank financial corporations nor of non-bank financial corporations. At best, they can claim money lender status, but they still need to register with the authorities, he said.
A Chinese man – Jia Chang – runs 11 apps that offer “hassle-free instant loans” in many states across the country. Loans to beneficiaries are awarded to Skyline Innovation Technologies, based in Singapore.
The cybercrime wing of the police has learned that people in other states like Tamil Nadu have also been harassed by enforcement officers.
In most cases, collectors who speak in local languages threaten beneficiaries with consequences and insist that dues be paid instantly. Most of the time, these apps target low-income people and offer a series of loans, if the first ones are paid on time. As the flow of money is easier, some people have resorted to these loans even if they needed them. So far, two call centers based in Bangalore and Gurgoan have been identified as making harassing calls to receipts for these loans.
City police have so far arrested 42 people related to these apps and seized bank accounts with Rs 87 crore. Usually, these loans are transferred from virtual accounts believed to be located abroad. This is the reason why the police requested the assistance of the MHA to discover the full scope of these enforcement activities in India.
Definitely, this is a multi-state racket behind several agencies. The Center will have to investigate whether any Chinese financial companies with ulterior motives are behind this. Already, the Center has alerted the NIA about this. Telangana police wrote to Google asking for a ban on 116 loan applications. Google has yet to respond to this, cops said.
A woman from Malakpet in the city took a loan of Rs 10,000 from MyInstant Money App in May, but only got Rs 8,700 after deducting processing fees and first installment interest. She, in her complaint to the police, said the full amount was repaid by the first week of November, but financiers insist she still owes Rs 7,000.
She is not alone, dozens more have come to the police and complained that the recovery agents of these apps were using abusive language and threatening them with dire consequences, unless the dues were not paid immediately. .