The ministry of corporate affairs is likely to cancel the registration of Chinese loan app companies and freeze their accounts if an investigation shows that they committed fraud, a government official said.

Zonal teams of the ministry’s investigation wing are finalising their preliminary reports on searches and raids conducted on the premises of Chinese loan app companies that are said to have scammed, extorted and harassed borrowers, following which the investigation report is likely to be finalised.

“The search and seizure on Chinese loan apps for Companies Act violations stands completed. The raids were conducted on these loan apps in many cities including Mumbai, Delhi NCR and Kolkata. The zonal teams will soon give a preliminary report, then in 2-3 months the final report will be submitted to the ministry of corporate affairs to take action,” the official told Moneycontrol.

The ministry of corporate affairs is investigating 665 Chinese companies, including loan apps, for offering easy loans and allegedly cheating people.

“The corporate affairs ministry may look at action against Chinese loan apps including fund freezing and striking off their registrations,” the official said.

Section 447 of the Companies Act deals with punishment for fraud, under which fines of not less than the amount involved in the fraud and as much as three times the amount involved may be imposed.

The Directorate of Enforcement is also investigating Chinese loan apps for allegedly laundering money. These apps allegedly get access to the data of people who apply for loans. Once prospective borrowers pay the processing fee, the app companies vanish.

The loan app companies are said to have built a network for siphoning money through fake loan offers. Several people have fallen into the trap of these predatory loan apps.

In a bid to tackle errant loan apps, the ministry of electronics and information technology, which is empowered to block apps, urged the Reserve Bank of India to design a more stringent KYC process for loan companies.

Source: Moneycontrol

The ministry of corporate affairs is likely to cancel the registration of Chinese loan app companies and freeze their accounts if an investigation shows that they committed fraud, a government official said.

Zonal teams of the ministry’s investigation wing are finalising their preliminary reports on searches and raids conducted on the premises of Chinese loan app companies that are said to have scammed, extorted and harassed borrowers, following which the investigation report is likely to be finalised.

“The search and seizure on Chinese loan apps for Companies Act violations stands completed. The raids were conducted on these loan apps in many cities including Mumbai, Delhi NCR and Kolkata. The zonal teams will soon give a preliminary report, then in 2-3 months the final report will be submitted to the ministry of corporate affairs to take action,” the official told Moneycontrol.

The ministry of corporate affairs is investigating 665 Chinese companies, including loan apps, for offering easy loans and allegedly cheating people.

“The corporate affairs ministry may look at action against Chinese loan apps including fund freezing and striking off their registrations,” the official said.

Section 447 of the Companies Act deals with punishment for fraud, under which fines of not less than the amount involved in the fraud and as much as three times the amount involved may be imposed.

The Directorate of Enforcement is also investigating Chinese loan apps for allegedly laundering money. These apps allegedly get access to the data of people who apply for loans. Once prospective borrowers pay the processing fee, the app companies vanish.

The loan app companies are said to have built a network for siphoning money through fake loan offers. Several people have fallen into the trap of these predatory loan apps.

In a bid to tackle errant loan apps, the ministry of electronics and information technology, which is empowered to block apps, urged the Reserve Bank of India to design a more stringent KYC process for loan companies.

Source: Moneycontrol