A latest update is coming in for the registration of Chinese loan app companies as the ministry of corporate affairs is planning to cancel and freeze their accounts if they are found to be involved in any fraudulent activity in their investigation, according to a government official.
A Report On Fraudulent Chinese Loan Apps
In the meantime, the Zonal teams of the ministry’s investigation wing are finalizing their preliminary reports.
They have conducted searches and raids on the premises of Chinese loan app companies which were suspected to be involved in the activities such as scams, extortion and harassing the borrowers.
Soon, the investigation report will be finalized in this regard.
The official said, “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,” in the media report.
Action Against Fraudulent Chinese Loan Apps
So far, the ministry of corporate affairs is investigating 665 Chinese companies.
This also includes loan apps as they offer easy loans and allegedly cheat people.
According to the official, “The corporate affairs ministry may look at action against Chinese loan apps including fund freezing and striking off their registrations.”
Presently, Section 447 of the Companies Act deals with punishment for fraud.
Under this act, fines of not less than the amount involved in the fraud and as much as three times the amount involved may be imposed.
Besides this, the Chinese loan apps are also being investigated by the Directorate of Enforcement for allegedly laundering money.
It all starts when these apps allegedly get access to the data of people who apply for loans.
These app companies vanish, as soon as the prospective borrowers pay the processing fee.
It appears that these loan app companies are said to have built a network so that they continue siphoning money through fake loan offers.
So far, many have fallen into the trap of these predatory loan apps.
Now, 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, in order to tackle errant loan apps.
