Instant loan apps offer quick and easy collateral-free loans, but many of these apps operate without any regulatory oversight. In fact, some of these apps were found to be run by Chinese nationals, processing transactions worth millions of dollars.
The latest arrest in such a case was made by Rachakonda Police in Telangana on January 13. She apprehended a 26-year-old Chinese national, identified as He. Jian, alias Mark, from the Chinese province of Jiangxi. He was arrested in Bombay. Police also arrested an Indian, Vivek Kumar, in connection with the case.
Jian came to India in August 2019 on a business visa and joined as a delegate on behalf of Chinese nationals Xu Nan, Xu Xinchang and Zhao Qiao, who are directors of several microfinance companies.
They operated apps like Krazy bean, Krazy rupee, cash plush, Rupee pro, Gold bowl, first cash, real rupee/rupee bear, rupee most, first cash, credit rupee, cool cash, money now, pocket rupee, rupee day , cash goo, cash star, cash bowl, cash just, cool rupee, money rupee, gold rupee, money helper, R cash, Money bell apps.
These Chinese nationals ran call centers in Pune and Thane, Maharashtra. Meanwhile, Rachakonda Police also confiscated Rs 30 crore kept in the bank account of the aforementioned companies.
Mahesh Bhagwat, the Rachakonda Area Police Commissioner, said he formally wrote to Google Play Store to remove these apps and approached the Ministry of Information Technology through official channels against these apps. He added that his department has also shared the FIRs with the Enforcement Directorate and raised the issue with the RBI.
Earlier, Hyderabad police made two more arrests in the case of an online instant loan scam run by a Chinese national identified as Zhu Wei (Lambo). He was detained at Delhi International Airport as he attempted to leave the country. Lambo is the Chief Operating Officer of Lending Applications which are operated by four companies – Aglow Technologies Pvt. Ltd., Liufang Technologies Pvt. Ltd., Nabloom Technologies Pvt., Ltd. and Pinprint Technologies Pvt. ltd.
Police also apprehended Kurnool resident K Nagarjun in connection with the case and revealed that another Chinese national by the name of Yuan Yuan alias Sissi alias Jennifer is the one who set up operations in India and currently found abroad.
Hyderabad Police alone has recorded around 27 cases. He said his preliminary investigation into financial transactions revealed that around 1.4 crore of transactions worth around Rs 21,000 crore had taken place so far.
On December 25, Cyberabad police in Telangana busted an online instant loan scam run by another Chinese national. Identified as Zixia Zhang, the man had launched 11 instant loan apps under multiple names. These apps offered short-term loans with excessive fees and interest rates. In case the borrower did not repay the loan on time, call centers, set up by Zhang across the country, harassed the client with threats, abuse and even false legal notices to family and friends. friends.
Loan Gram, Cash Train, Cash Bus, AAA Cash, Super Cash, Mint Cash, Happy Cash, Loan Card, Pay Off One, Piggy Bank, Monkey Box, Rupee Day, Cash Goo, Cash Star, Real Rupee , First Cash, Krazy Bean , Krazy Rupees, Cashplus, Rupee Pro, Gold Bowl, Monkey Box, Past Credit app, Cool Cash, Money Now, Pocket Rupee, Happy Cash, Loan Card and Repay One are some of the apps engaged in unauthorized online loans.
Meanwhile, the Reserve Bank of India (RBI) has set up a committee to come up with ways to regulate the burgeoning digital lending space. A 6-member working group was formed to study digital lending in the regulated and unregulated financial sector in order to design a regulatory framework for it.
The growing threat of these on-the-fly lending apps has brought new challenges for banks, RBI and NBFC. These tech-savvy companies, seen as gap fillers in credit markets, pose as lenders using shoddy lending practices and offering unsecured loans to the urban/rural poor, working on-demand, small traders and merchants, and people with low credit scores, or no credit history.
The Reserve Bank of India (RBI) had said in June last year that banks and non-bank financiers, whether they lend through their own digital platform or through an outsourced entity, must adhere to guidelines on fair practices with a real intention.
Several of these fintech apps circumvent the law by opening current accounts with banks without the involvement of NBFCs. Since the entire loan disbursement and collection process is done through these accounts, these apps bypass regulations, including KYC (know your customer). They also do not report to the credit bureaus.
Instant loan apps offer loans to individuals and charge exorbitant interest rates and processing fees. These could vary from 2 to 3% per month, or an average of 24 to 36% per year.