New Delhi: Chinese criminal syndicates and gangs are conducting scam operations illegally in India. Several such cases of digital usurers have been detected in the recent past and the scale of such illegal activities is suspected to have increased over a period of time.
Recently, a case of so-called ‘Chinese loan application’ came to light in the Dwarka area of Delhi.
The racket was being run by some Chinese operators disguised as a local BPO consulting firm, Fly High Global Services and Technology. The modus operandi began with the simple advertisement of the ‘On Stream’ online loan application on social networks to attract customers who wanted to obtain loans without problems in minutes.
It primarily targeted local youth who suffered the most during the recent pandemic and are in dire need of money to cover urgent family expenses. Once downloaded, the app searched for permissions to access the victims’ contacts, which the company then used to blackmail its customers.
Chinese blackmail charged exorbitant interest and the victims were threatened, mistreated and even blackmailed. They sent derogatory messages to the victim’s contacts on her behalf. Operators also used photographs of Aadhaar and PAN card victims to blackmail and extort them.
Over the last four months, the gang had allegedly extorted around $12 million, of which 30 percent was commission from the local Indian firm. Local police, who raided the three-story building in Dwarka and arrested the kingpin, were shocked to find around 150 employees working at the company along with around 300 SIM cards in the name of a different local company.
Chinese entities have penetrated 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 microlending apps have started operating in India under very shady terms.
They are attracting customers who are under pressure. Borrowers were charged exorbitant interest rates and processing fees, pushing many lower middle class people into the debt trap and even forcing them to commit suicide.
Claiming to play fair, Chinese instant loan apps Momo, CashBus, Timely Cash, Y Cash, Kissht, Robo Cash, Fast Rupee, Cash Mama and Loan Time also offered payday loans to Indians, targeting borrowers in the lower end of the economic strata. Many of these apps show over a million installs.
Indian investigative agencies reported that a number of fintech companies in collusion with Indian Non-Bank Financial Firms (NBFCs) had indulged in predatory lending, violating Reserve Bank of India guidelines. China-backed fintech companies had a memorandum of understanding (MoU) with NBFC 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 RBI to make loans, they devised the MoU route with the now-defunct Indian NBFCs to engage in large-scale lending activities.
The Indian tax authorities revealed that decisions on setting interest rates/platform fees etc. they were taken over by fintech companies and were operating on the instructions of controllers in China and Hong Kong.
Many of these cases were reported in India during the last 8 to 10 months. Observers noted that undetected cases could be even higher. There is increasing evidence that they are well coordinated at the regional level and linked to other nodes of illicit activity.
Chinese fraudsters are exploiting loopholes in the legal system of host countries, often targeting unemployed youth and economically stressed lower strata of society, who become easy prey for such gangs.
These cases are also common in Southeast Asia. Media reports from across the region allege that hundreds of Malaysians, Filipinos and Indonesians have also been lured to Cambodia by organized crime groups based in and around Sihanoukville.
The city is known for lawlessness, casinos, and Chinese criminal gangs. Investigators found that most kingpins operate from China, but employ locals in neighboring countries to carry out their broader transnational criminal activities.