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Chinese criminal syndicates and gangs are running scam operations illegally in India. Several such digital loanshark cases have been detected in the recent past, and it is suspected that the scale of such illegal activities has increased over a period of time.
Recently, a case of a so-called “Chinese loan app” racket came to light in Delhi’s Dwarka area.
The racket was being run by some Chinese handlers in the garb of a local consulting BPO firm, Fly High Global Services and Technology. The modus operandi started with the simple advertisement for the ‘On Stream’ online loan app on social media to attract customers who wished to avail hassle-free loans in minutes.
It was targeting mostly local youth, who suffered most during the recent pandemic and are in dire need of money to meet urgent family expenses. Once downloaded, the app sought permission to access the victims’ contacts, which were utilised later by the company to blackmail its clients.
The Chinese racket charged exorbitant interests, and the victims were threatened, abused, and even blackmailed. They sent derogatory messages to the victim’s contacts on his or her behalf. The telecallers also used the victims’ photographs from Aadhaar and PAN cards to blackmail them in order to extort money from them.
Over the last four months, the gang has allegedly extorted around $12 million, of which 30 percent was the commission of the Indian local firm. The local police, who raided the three-story building in Dwarka and arrested the kingpin, were surprised to find around 150 staff working in the firm along with around 300 SIM cards in the name of a different local company.
Chinese entities have penetrated into the Indian credit market and are exploiting Indian borrowers by making use of some loopholes in the legal system. Since the pandemic-induced lockdown, scores of Chinese-owned micro-lending apps have started operating in India under very shady terms.
They are attracting customers who are under duress. The borrowers were charged exorbitant processing fees and interest rates, pushing many lower-middle-class people into the debt trap and forcing them to even 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 were also offering payday loans to Indians, targeting borrowers on the lower end of the economic strata. Many of these apps have more than a million installs.
Indian investigating agencies were informed that various fintech companies, in collusion with Indian non-banking financial companies (NBFCs), had indulged in predatory lending, violating the guidelines of the Reserve Bank of India. Fintech companies backed by China had memorandums of understanding (MoUs) with NBFCs to provide instant personal loans for terms ranging from seven to 30 days, by-passing the regulatory system.
Since fintech companies were unlikely to get a fresh NBFC license from the RBI to provide loans, they devised the MoU route with the already defunct Indian NBFCs to indulge in large-scale lending activities.
Indian tax authorities disclosed that decisions on fixing interest rates, platform fees, etc. were taken by the fintech companies and that they were operating on instructions from handlers in China and Hong Kong.
Many such cases have been reported in India during the last 8–10 months. Observers pointed out that the undetected cases could be even more. There is mounting evidence that these are regionally well-coordinated and linked to other nodes of illicit activity.
Chinese scammers are exploiting the loopholes in the legal systems in the host countries, often targeting the unemployed youth and financially stressed lower strata of society, who become easy prey for such gangs.
These instances are common in South East Asia too. Media reports from across the region allege that hundreds of Malaysians, Philippians, and Indonesians have also been lured to Cambodia by organised crime groups based in and around Sihanoukville.
The city is notorious for lawlessness, casinos, and Chinese criminal gangs. Investigators found that most of the kingpins are operating from China, but they employ locals in neighboring countries to run their wider transnational criminal activities.
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