Instant loan apps offer quick and easy loans with no collateral, but many such apps operate without any regulatory supervision. In fact, some of these apps have been found to be run by Chinese nationals, dealing in transactions worth crores.
Instant lending apps provide quick and easy loans with no collateral, however many of these applications are not regulated. In reality, several of these apps have been discovered to be managed by Chinese nationals who deal in multi-billion dollar transactions.
Rachakonda police in Telangana made the most recent arrest in this case on January 13. It detained a 26-year-old Chinese national named He. Jian, alias Mark, who was a native of China's Jiangxi province. In Mumbai, he was apprehended. Vivek Kumar, an Indian, was also arrested in connection with the case.
Jian arrived in India on a business visa in August 2019 and joined as a representative on behalf of Chinese citizens Xu Nan, Xu Xinchang, and Zhao Qiao, all of whom are directors of microfinance organisations.
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These Chinese nationals ran call centres in Maharashtra's Pune and Thane. Meanwhile, the Rachakonda police have seized Rs 30 crore from the above-mentioned companies' bank accounts.
The police commissioner of Rachakonda zone, Mahesh Bhagwat, stated that they have written to Google Play Store to request the removal of these apps and have also petitioned the Ministry of Information Technology through official channels. He went on to say that his department has shared FIRs with the Enforcement Directorate and that the subject has been brought up with the RBI.
Earlier, Hyderabad Police had made two more arrests in the case of a Chinese national named Zhu Wei who ran an online rapid loan scam (Lambo). When he attempted to exit the country, he was arrested at Delhi International Airport. Lambo is the chief of operations for Aglow Technologies Pvt. Ltd., Liufang Technologies Pvt. Ltd., Nabloom Technologies Pvt., Ltd., and Pinprint Technologies Pvt. Ltd., which run lending apps.
K Nagarjun, a Kurnool resident, was also arrested in connection with the case, and police revealed that another Chinese national, Yuan Yuan aka Sissi aka Jennifer, was the one who set up shop in India and is currently abroad.
Around 27 cases have been filed by the Hyderabad police department alone. According to the early investigation of financial activities, around 1.4 crore transactions worth around Rs 21,000 crore have occurred so far.
On December 25, police in Telangana's Cyberabad busted an online fast loan fraud conducted by another Chinese individual. The individual, identified as Zixia Zhang, had developed 11 rapid loan apps under various aliases. Short-term loans with exorbitant fees and interest rates were available through these apps. In the event that the borrower did not repay the loan on time, the call centres set up by Zhang across the country harassed the client with threats, abuses, and even forged legal notices to family and friends.
Meanwhile, the Reserve Bank of India (RBI) has formed a committee to recommend methods to regulate the rapidly growing digital lending industry. A six-member working group has been formed to investigate digital lending in both the regulated and unregulated financial sectors in order to develop a regulatory framework.
Banks, the RBI, and NBFCs are all facing new hurdles as a result of the growing menace of these fly-by-night loan apps. These tech-savvy organisations, which are considered as credit market fillers, pose as lenders using shady lending tactics and selling unsecured loans to the impoverished in cities and rural areas, as well as gig workers, small shops and dealers, and persons with bad credit ratings or no credit history.
Several of these fintech apps get around the prohibition by opening bank accounts without the involvement of NBFCs. Because the whole loan disbursement and collection procedure takes place through these accounts, these applications avoid KYC requirements (know your customer). They don't even report to the credit bureaus.
Individuals can apply for loans using rapid loan applications, which demand outrageous interest rates and administrative fees. These could vary from 2% to 3% per month, for a total annual increase of 24-36 percent.
Conclusion
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