Govt Begins Crackdown on Chinese Loan App Companies in Bengaluru, Gurugram, Hyderabad


With the impact of News18 investigative series on Chinese loan app scam, involving as many as 1,000 illegal companies operating in India and trapping many needy and innocent in the vicious debt, the government has begun conducting massive raids and searches in Bengaluru, Hyderabad and Gurugram.

The News18 series highlighted how these companies were registered illegally under one address and their company representative was never found on the office premises.

A senior government official told News18 the corporate affairs’ ministry raided the companies, which included those that helped Chinese open firms in India with fake directors. “It has been found that they used co-working spaces to register their companies. We had also received communication from various law enforcement agencies, after which a massive crackdown has been initiated. Currently, officials initiated action in Bangalore, Hyderabad, and Gurugram,” the government official said.

Sources also confirmed that the home ministry will soon start a campaign to educate people about the fake Chinese loan apps, and is likely to write a letter to all states to take the required steps against them.

The home ministry has already written to Central intelligence agencies asking for their view on nearly 300 Chinese loan apps.

In its first part of the series, News18 had revealed that the home ministry is planning a massive crackdown against these apps and is likely to ban 300 companies operating them.

Moreover, after the impact of News18 series, the Enforcement Directorate (ED) said on September 3 it conducted raids at Bengaluru premises of online payment gateways such as Razorpay, Paytm and Cashfree as part of an ongoing probe against “illegal” instant smartphone-based loans “controlled” by the Chinese. The searches were launched at six premises in Karnataka’s capital city, the ED said in a statement.

The search operation is in progress, the Enforcement Directorate said. The federal probe agency said it has seized Rs 17 crore worth funds kept in “merchant IDs and bank accounts of these Chinese persons-controlled entities”, during the raids.

The News18 series focused on how the predatory lending by instant loan apps has led to a spate of suicides in several states. Despite the arrest of several players, including Chinese nationals and Indian accomplices, such apps continue to flood the market. They lure desperate individuals into the debt trap and abuse access to their smartphone data to extort exorbitant amounts.

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