Telangana: police arrest another Chinese national in loan application scam
In his instant loan applications under investigation, Rachakonda police arrested another Chinese national on Wednesday. The 26-year-old Chinese national, identified as He. Jian, alias Mark, is from China’s Jiangxi Province. He was arrested in Bombay. An Indian, Vivek Kumar, 26, was also arrested by the police.
Chinese national He. Jian arrived in India in August 2019 on a business visa and joined as a representative on behalf of Chinese nationals Xu Nan, Xu Xinchang and Zhao Qiao. They are directors of different microfinance companies.
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They ran call centers in Thane and Pune in Maharashtra. Rachakonda Police seized Rs 30 crore held in the above companies’ bank accounts.
“We have written to Google Play Store to remove these apps. We are also contacting the Ministry of Information Technology through official channels against these apps. We have shared the FIRs with the App Directorate and also discussed the deal with the RBI, ”Mahesh said. Bhagwat, the police commissioner of the Rachakonda area.
Police have formed special teams to investigate the case. They are also seeking to expedite the case for a speedy conviction.
THE WALLS OF CHINESE FRAUD
Telangana Police, who are investigating the found mega loan application, face a daunting challenge to smash what appears to be a international racketeering using mobile phone based applications to defraud people.
While at least six people have committed suicide due to alleged harassment by instant loan providers, police face a language barrier when investigating Chinese nationals arrested during the investigation and suspected of ‘be the mastermind of fraud.
Hyderabad’s Central Crime Station has registered 190 cases related to loan application fraud, while the Cyberabad and Rachakonda commissioner areas are investigating the case separately. Both have also arrested Chinese nationals.
Earlier in August 2019, Hyderabad police dismantled an online gambling racket and arrested a Chinese national. The case is still under investigation.
Important Telangana Police sources have confirmed that while the Execution Directorate is constantly informed of the racketeering and the related investigation, it also uses Interpol to check the criminal background of the arrested Chinese nationals.
A preliminary investigation into financial transactions revealed that nearly 1.4 crore of transactions worth almost Rs 21,000 crore have taken place so far. These transactions took place through payment gateways and bank accounts linked to these companies.
A large number of international transactions have also taken place via bitcoins. Much of the trading has taken place in the past six months.
So far, the investigation has not been able to establish whether these apps are connected to an NBFC or not.
HOW FRAUDERS WORK
The accused Chinese nationals reportedly developed instant loan applications offering loans to people aged 20 to 40 with high interest rates. They are also launching several sister companies and offering loans through their online loan applications available on Google Play Store.
To get the repayments from the borrowers, they have also set up call centers in various parts of the country. These apps are developed in such a way that when installing these apps, they have access to contacts, mobile information and other data on the device. These applications collect proof of identity, PAN card, KYC documents, bank details of customers.
The apps verify the authenticity of documents and pay small amounts in the form of loans to their bank accounts after deducting processing fees and GST i.e. 25-30% in advance. There would be two categories of loan periods – 7 days and 15 days.
At the end of the due date, the customer is placed in a bucket list (S-0, S-1, S-2, S-3, M2, M3, X, etc.). The lower the compartment in which the borrower is, the less the abusive treatment. Abuse and harassment increase with the larger bucket.
Once a customer has been declared in default, the call center calls and abuses the borrower in foul language and threatens them with dire consequences. They even go so far as to access customer contacts from their phones and begin to abuse and threaten family members, relatives and friends with calls and messages. They also blackmail innocent people by sending false legal notices.
The operators suggest that the victims make the repayments by taking out a loan from their other loan applications. Clients sometimes fall into their trap by taking loans through other loan applications and end up paying huge sums, and stuck in a never-ending cycle.