Centre and states team up to fight on the Chinese Digital lending apps

The Centre and state governments along with the Reserve Bank of India (RBI) has started action against the culprits of the Chinese lending apps operating with near impunity in the country and wreaking havoc in the lives of borrowers.

Google on Thursday said it has reviewed hundreds of personal loan apps in India that were flagged by users and government agencies and those found to be violating its user safety policies were immediately removed from its Play Store. In addition, we will continue to assist the law enforcement agencies in their investigation of this issue, says Suzanne Frey, vice president, product, Android Security and Privacy.

Various state governments have also started cracking on these lenders, commonly known as “Chinese lending apps. It would not be correct to say that only Chinese nationals run these shady lending practices, sources said several Indians are also involved in this racket.

A user just needs to download any app floated by such fraudsters and apply for instant loans.These apps are mainly concentrated on Google Play considering the reach and popularity of Android systems.

As per the report, the Cyber Crime police of Hyderabad raided three centres in Hyderabad, and two in Gurugram running such operations. These firms employed more than 1,100 telecallers taking instructions, apparently from Chinese Nationals operating from Jakarta, Indonesia.

The police raided Liofang Technologies, Hotful Technologies, Pinprint Technologies and Nabloom Technologies, all registered in Bengaluru.The primary purpose was to “persuade, harass and intimidate loan defaulters at various stages,” Commissioner of Police Anjani Kumar said.

Once these Chinese apps installed, on the phone, it accesses various aspects of the smartphone. The user has to give access to the entire contact list, messages, and all vital information stored in the phone.The loans are instantly given.

The Apps offers Rs 500 to Rs 50,000 at 100 per cent to 800 per cent interest rates for tenures of seven days to six months. If there is a delay in repayment, or default, the tele-callers start harassing the customers.

There are persistent threats, not only to the borrowers, but having all the phone numbers handy, to the nearest family members as well. If those tactics fail, recovery agents are sent.

Those agents, usually goons masking as finance company employees, regularly rough up the customers and snatch personal belongings. Apart from very deep pocketed foreign nationals, there are hundreds of Indians involved.

These organisations are not registered with the RBI and they don’t maintain accounts with a single bank. Most of the time, the accounts where the money get submitted is in the names of relatives or shell companies.

They are like goons on hire. They don’t work for one company, but goes by the list given to them. Once they are able to recover the money, they earn fat commissions.

If foreign nationals are handling the operations, the money get routed out of India through an elaborate web of shell companies, including through companies registered as infrastructure NBFCs. Sources said that, Hawala routes are also regularly used, informed the source.

Digital lenders have come together to form bodies such as FinTech Association for Consumer Empowerment (FACE) and Digital Lending Association of India to fight the Chinese lending apps.

During the pandemic, there was a growth of these digital lenders, having their roots in Indonesia, or China. They came out with multiple apps, which was being run by a group of 2-3 entities and their strategy was to not build a brand so that they remain unnoticed on a larger scale.

Expert says, it is difficult to close such operations altogether. The best way to safeguard against these practices is more education and self-awareness.

Google did not disclose the names of the apps removed , However, the blogspot says, we have reviewed hundreds of personal loan apps in India, based on flags submitted by users and government agencies. The apps that were found to violate our user safety policies were immediately removed from the store, and we have asked the developers of the remaining identified apps to demonstrate that they comply with applicable local laws and regulations.