Govt Goes After Chinese Loan Apps That Disappear After Cheating People Out Of Money: Report

The Ministry of Corporate Affairs is reportedly poised to cancel the registration of Chinese loan app companies and freeze their accounts if investigations reveal fraudulent activities.

What Happened: Zonal teams of the ministry’s investigation wing are concluding preliminary reports on searches and raids conducted on Chinese loan app companies accused of scamming, extorting, and harassing borrowers, Moneycontrol reported, citing a government source.

Once the zonal teams submit their preliminary reports, the final report is reportedly expected to be submitted to the Ministry of Corporate Affairs within two to three months, leading to potential actions such as freezing funds and striking off registrations.

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Further Details: The ministry is investigating 665 Chinese companies, including loan apps, for offering easy loans and allegedly cheating people.

The Directorate of Enforcement is also examining these loan apps for potential money laundering, as they allegedly obtain access to applicants’ data and disappear after receiving processing fees. Several thousands of people have recently fallen victim to such scams recently.

To combat fraudulent loan apps, the Ministry of Electronics and Information Technology has urged the Reserve Bank of India to implement a more rigorous Know Your Customer (KYC) process for loan companies.

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Posted In: Scams