New Delhi: Chinese criminal syndicates and gangs are running illegal scam operations in India. Several such cases of digital loan sharks have been uncovered in the recent past and it is believed that the scale of such illegal activities has increased over time.
Recently, a case of a so-called “Chinese credit app” came to light in the Dwarka district of Delhi.
The racket was operated by a few Chinese traders in the guise of a local BPO consultancy, Fly High Global Services and Technology. The modus operandi began with simply promoting the online lending app On Stream on social media to attract customers looking to avail no-hassle loans in minutes.
It was mainly aimed at local youth who have suffered the most from the recent pandemic and are in dire need of money to cover urgent family expenses. Once downloaded, the app searched for permissions to access victims’ contacts, which was later used by the company to blackmail its customers.
The Chinese thug demanded exorbitant interest and the victims were threatened, verbally abused and even blackmailed. They sent derogatory messages to the victim’s contacts on his behalf. The phone callers also used the Aadhaar victims’ photos and PAN cards to blackmail them to extort money from them.
In the past four months, the gang had allegedly extorted around $12 million, 30 percent of which was commissions from the local Indian company. Local police, who searched the three-storey building in Dwarka and arrested the kingpin, were surprised to find around 150 employees from the company along with around 300 SIM cards on behalf of another local company.
Chinese companies have entered the Indian credit market and are taking advantage of Indian borrowers by exploiting some loopholes in the legal system. Since the lockdown caused by the pandemic, numerous Chinese-owned microcredit apps have been launched in India under very dodgy conditions.
They attract customers who are under duress. Borrowers were charged exorbitant processing fees and interest rates, which drove many lower-middle-class people into debt and even forced them to commit suicide.
Chinese instant loan apps Momo, CashBus, Timely Cash, Y Cash, Kissht, Robo Cash, Fast Rupee, Cash Mama and Loan Time claimed to play fair and also offered payday loans to Indians, targeting borrowers at the bottom of the world economic strata. Many of these apps have more than a million installs.
Indian investigative authorities informed that various fintech companies had engaged in predatory lending in collusion with Indian non-bank financial corporations (NBFC), thereby violating the guidelines of the Reserve Bank of India. China-backed fintech companies had a memorandum of understanding (MoU) with NBFCs to provide instant personal loans with terms of seven to 30 days, bypassing the regulatory system.
Since fintech companies are unlikely to get a new NBFC lending license from the RBI, they have developed the MoU route with the already dissolved Indian NBFCs to engage in large-scale lending activities.
The Indian tax authorities revealed that decisions on setting interest rates/platform fees etc. were made by the fintech companies and they were operating under the direction of traders in China and Hong Kong.
Many such cases have been reported in India in the last 8-10 months. Observers pointed out that there could be more undetected cases. There is growing evidence that these are well coordinated regionally and linked to other hubs of illegal activity.
Chinese scammers exploit loopholes in the host country’s legal system, often targeting unemployed youth and financially stressed lower classes, who become easy prey for such gangs.
These cases are also common in Southeast Asia. Media reports from across the region claim that hundreds of Malaysians, Filipinos and Indonesians have also been lured into Cambodia by organized crime groups based in and around Sihanoukville.
The city is notorious for lawlessness, casinos and Chinese criminal gangs. Investigators found that most of the kingpins operate out of China, but they employ locals in neighboring countries to carry out their broader transnational criminal activities.