Chinese syndicates and criminal gangs carry out scam operations illegally in India. Several cases of such digital loan sharks have been detected in the recent past, and it is suspected that the scale of such illegal activities has increased over time.
Recently, a case of a so-called “Chinese Loan App” came to light in the Dwarka region of Delhi.
The racket was led by Chinese managers in the guise of a local BPO consulting firm, Fly High Global Services and Technology. The modus operandi started with the simple advertisement of the online loan app “On Stream” on social media to attract customers who wanted to avail hassle-free loans within minutes.
It mainly targeted young people in the region, who have suffered the most from the recent pandemic and are in dire need of money to meet urgent family expenses. Once downloaded, the app requested permission to access the victims’ contacts, which were then used by the company to blackmail its customers.
Chinese racketeering charged exorbitant interest, and victims were threatened, abused, and even blackmailed. They sent derogatory messages to the victim’s contacts on his behalf. The callers also used the photographs of the Aadhaar victims and STOVE cards to blackmail them into extorting money.
Over the past four months, the gang allegedly extorted around $12 million, 30% of which was commission from the local Indian business. Local police, who raided the three-storey building in Dwarka and arrested the kingpin, were surprised to find around 150 employees working at the business as well as around 300 SIM cards in the name of a different local business.
Chinese entities have entered the Indian credit market and are exploiting Indian borrowers by taking advantage of loopholes in the legal system. Since the pandemic-induced lockdown, dozens of Chinese-owned micro-lending apps have started operating in India under very dodgy conditions.
They attract customers under duress. Borrowers were charged exorbitant processing fees and interest rates, pushing many lower-middle-class people into debt traps and even forcing them to commit suicide.
Claiming to play fair, Chinese instant loan apps Momo, CashBus, Timely CashY Cash, Kissht, Robo Cash, fast rupeeCash Mama, and loan time also offered payday loans to Indians, targeting borrowers at the bottom of the economic ladder. Many of these apps have over a million installs.
Indian investigative agencies have been informed that various fintech companies, in collusion with Indian Non-Banking Financial Companies (NBFCs), have engaged in predatory lending, in violation of the guidelines of the Reserve Bank of India. China-backed fintech companies had memorandums of understanding (MoUs) with NBFCs to provide instant personal loans for terms ranging from seven to 30 days, bypassing the regulatory system.
Since fintech companies were unlikely to get a new NBFC license from the RBI to provide loans, they devised the MoU route with the already defunct Indian NBFCs to engage in large scale lending activities.
Indian tax authorities have revealed that decisions on setting interest rates, platform fees, etc. were taken by fintech companies and that they operated on the instructions of managers in China and Hong Kong.
Many such cases have been reported in India over the past 8-10 months. Observers have pointed out that undetected cases could be even higher. There is growing evidence that these are well coordinated regionally and linked to other nodes of illicit activity.
Chinese scammers exploit loopholes in host countries’ legal systems, often targeting unemployed youth and financially challenged lower sections of society, who become easy prey for these gangs.
These cases are also common in Southeast Asia. Media across the region claim that hundreds of Malaysians, Philippiansand Indonesians have also been lured into Cambodia by organized crime groups based in and around Sihanoukville.
The city is known for lawlessness, casinos and Chinese criminal gangs. Investigators have found that most kingpins operate from China, but employ people from neighboring countries to carry out their broader transnational criminal activities.