Taking loans is quite a risky task, people get trapped by taking unnecessary loans whether they can repay them or not. Some people even commit suicide due to the burden of loans. You may have heard of many loan applications providing you with instant loans without much hassle and documents. But do you know many of these apps are fake and are fooling you in one way or another. This article is all about How Chinese loan apps are targeting Indians and Many Fake Loan Apps in India which are harassing their customers.

Modus Operandi of Chinese Loan Apps in India

Nowadays, a different loan-related problem is happening in India. There are some apps where you take a loan, and repay them, but even then more money is demanded from you and threatened to shame you publicly. Most shocking point is that these entire Chinese loan Apps or Fake loan Apps in India are easily available on Google Play Store. They can have any weird name. Like Instant Loan, Easy loan, Handy Loan, Jitu Loan, etc. When you download and install these apps on your phone, they ask for your phone number to log in.

An average person who is in dire need of a loan and those who cannot get a loan easily because of no credit history would want to install these apps as they are providing instant loans hassle-free. 

When these apps are installed on phones, they asked permission to access the contact list and photo gallery. And then you upload copies of your Aadhar card and PAN to get a loan in these fake apps. In most cases, these companies actually deposit money in your bank account. The problem starts after one week. A week later, they call the borrower and ask for loan repayment. Reportedly, they ask for an amount much higher than they gave the borrower as a loan. They have personal numbers of borrowers so they send them WhatsApp messages and if the money is not repaid, then the messages turn into harassment.

People are blackmailed and harassed over WhatsApp. They threaten to lodge a police complaint or FIR. If the borrower still refuses to pay the loan then these fake loan apps employees levels up their harassment methods. They started morphing photos of the borrower or their relatives as they have access to the borrower’s camera gallery because at the time of installing these apps borrower has permitted to do so. They started sending morphed photos to the borrower itself by telling that they will publicly publish that for being a loan defaulter. 

The Chinese scammers were not working themselves; rather they had employed local Indians for this. In the case of a young woman, her morphed obscene photos were sent to her family, her cousins. In this specific case, the railway police busted this racket and found out that it was a 19-year-old unemployed youth from Karnataka who was working as a recovery agent for these Chinese Loan Apps behind morphed pictures. 

Fake loan Apps in India

Recently, many Chinese Internationals are arrested for blackmailing and extorting money from people through instant loan mobile applications. This issue has raised several concerns. Reportedly, the racket gained momentum during the Covid-19 Pandemic

These scams can be broadly classified into categories like trading and crypto investments, simple investments that come with offers like coupons on e-commerce sites, gaming applications, and loan services.

These mobile applications provide a small amount of instant loans at a higher interest rate, which, for example, may range from 15 % to 20%. These applications are more likely to not follow the strict procedures followed by the banks before giving out loans, such as customer verification and due diligence.

ED’s Action against Chinese Loan Apps

Entities were generating proceeds of crime through various merchant accounts held with payment gateways, ED(Enforcement Directorate) said in a media report. 

These entities created fake Indian directors in these firms using fraudulent paperwork, evading the regulatory framework., it added.

According to a media report, cyber cops got the first lead in the case during the last week of June 2022 and arrested one accused from Andhra Pradesh identified as Sudhakar Reddy,25. As of October 2022, the Police continue to make arrests in this matter.

In September 2022, Chinese-controlled loan applications parked in Merchant Ids with payment gateway providers were frozen by the Enforcement Directorate (ED) for Rs 9.82 crores. Later, it conducted searches in Delhi, Ghaziabad, Mumbai, Lucknow, and Gaya as part of its investigation into money laundering involving the app-based token known as HPZ and associated organisations.. 

How to differentiate between fake loan companies in India and genuine loan companies?

• The simple answer to it is the RBI. All the digital lending apps in the country have to be compulsorily registered with the RBI. Lenders that are not registered with the RBI are not allowed to lend money.
• You can go check on RBI’s website if the company lending you money is registered with the RBI, does the company have a registration number? Run the registration number on RBI’s website to check whether it is genuine or not. 
• Check whether these loan companies have a physical address in India or not.
• Often these fake loan apps do not have websites. If exists, then check whether the website is secured or not.
• Check whether the apps giving you loans are asking for your KYC (Know Your Customer), as it is a mandatory procedure defined by RBI.
• See if the app giving you a loan is checking your creditworthiness. Genuine lending companies check your credit score before giving you a loan. 
• Check if there is a loan agreement. These fake loan apps promise you instant loans without any hassle. But genuine lenders follow RBI’s fair practice code. There is a formal loan agreement in which Terms and conditions, Interest Rates. Processing Charges, the Repayment period is mentioned. Apps that tell you there’s zero paperwork to get a loan are dangerous. 

Conclusion

Not only the lives of thousands of people are ruined by Chinese loan app scams, but this causes an impact on the Indian economy too as millions of rupees are sent out of India. The victims of fake loan apps are often, poor people. The Covid Pandemic was a major reason that saw a huge boom in these fake loan apps in India. After millions of people lost their jobs, many unemployed people get easily trapped in these scams as they were desperate for money. 

List of Chinese loan apps banned in India & Fake loan apps list in India

The Government of India has banned many Chinese Loan Apps in India. You can find out the list of fake loan apps in India also the list of Chinese loans apps banned in India just by clicking on this link.