Govt Finds Evidence Of Fraud In Majority Of 500 Chinese Firms Under Probe

The Ministry of Corporate Affairs (MCA) has reportedly uncovered fraudulent activities in a majority of the 500 Chinese companies whose investigation reports have been finalised.

What Happened: The MCA is now preparing an action plan, including summoning the directors of these companies, some of which host loan apps and filing charges before special courts, Moneycontrol reported, citing three government officials.

MCA investigations into loan apps operating in the country focus on predatory lending practices, fraud or violations of financial regulations. There has been growing concern over the proliferation of digital lending apps in India, with some linked to Chinese companies. These apps have been accused of aggressive tactics, charging exorbitant interest rates and engaging in unethical practices such as borrower harassment.

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According to one MCA official, companies failing to comply with mandatory filing requirements will be struck off or removed from the official register of companies, effectively ending their legal existence.

Out of the total 665 Chinese firms under probe, over 70% have already been investigated and the reports have been submitted, a senior government official told the publication.

Strict Action: These companies came under MCA scrutiny for various non-compliance issues and alleged fraudulent activities, including fund siphoning. Entities incorporated under the Companies Act are required to file annual documents such as balance sheets and profit and loss accounts electronically with the Registrar of Companies.

The government will go to special courts with charge sheets of fraud, another senior government official added.

Investigations for the remaining Chinese companies are at an advanced stage, according to a third government official.

Given the geopolitical and trade tensions between India and China in recent years, there has been heightened scrutiny of Chinese investments and business activities in India. The Indian government has taken various measures to ensure transparency and accountability in dealings involving Chinese companies, particularly in sensitive sectors such as technology, infrastructure and finance.

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Posted In: GovernmentNewsRegulationsGlobalMinistry of Corporate Affairs