The Enforcement Directorate (ED) again cracked the whip on illegal Chinese loan apps on Wednesday (March 29), attaching movable assets worth INR 106 Cr belonging to several lending app operators under the provisions of the Prevention of Money Laundering Act, 2002.
However, Indian fintech startups may be targeted again this time. This is because the seized funds were held by a number of Indian fintech startups and banks. Names like Razorpay, Cashfree, Paytm, PayU, and Easebuzz are among these fintech startups.
An investigation into the case is currently underway. The action was taken after the enforcement agency launched an investigation based on a FIR filed at Bengaluru’s Cyber Crime Police Station under various sections of the Indian Penal Code and the IT Act.
The case involved a number of Chinese entities and nationals accused of extortion and harassment of people who had obtained loans through loan apps controlled by these foreign citizens.
According to the ED, many of these entities floated companies by appointing dummy directors on behalf of Chinese nationals. These entities allegedly obtained many Indian nationals’ KYC information and appointed locals as directors of these firms without their consent.
“These entities are engaging in illegal/criminal activities by submitting false addresses in KYC documents and receiving assistance from various professionals and other individuals,” the ED added.
Following that, these entities would provide instant loans to customers who used their apps, charging exorbitant interest rates and high processing fees. These firms would then use predatory tactics to recover the loan amounts, including threats and even contacting borrowers’ family members and friends to ask for money.
For all the wrong reasons, these illegal loan apps have recently gotten a lot of attention. Many of these platforms are illegal and have a reputation for harassing customers.
