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Center Calls on States and UTs to Take Urgent Action Against Predatory Chinese Lending Apps


By PTI IST (Released)

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He said that a large number of complaints have been reported across India regarding illegal digital lending apps that provide short term loans or microloans at exorbitant interest rates with processing or hidden charges, especially vulnerable and low-income people.

The union’s Home Office has called for urgent and strict law enforcement action against predatory loan apps, as the harassment, blackmail and harsh clawback practices of these Chinese-controlled entities have led to multiple incidents of suicide.

In a communication to all states and union territories, the Home Office said the issue had had a serious impact on national security, the economy and the safety of citizens.

He said that a large number of complaints have been reported across India regarding illegal digital lending apps that provide short term loans or microloans at exorbitant interest rates with processing or hidden charges, especially vulnerable and low-income people.

Lenders use borrowers’ confidential personal data like contacts, location, photos and videos for blackmail and harassment.

“The harsh clawback practices followed by these illegal loan applications have claimed many victims across India. This issue has had a serious impact on national security, economy and citizen safety,” the communication reads.

The Home Ministry has stated that these illegal lending apps which may not be Regulated Entities (RE) by the Reserve Bank of India are using bulk texting, digital advertisements, instant messaging and online shopping. large-scale mobile applications. The borrower must provide mandatory access to contacts, location and phone storage in order to avail the loans.

“This data is being misused to harass and blackmail citizens using distorted images and other abusive practices by recovery agents located in India as well as overseas violating RBI’s Code of Fair Practices” , the states and UTs said.

Home Office says after investigation it was an organized cyber crime carried out using disposable emails, virtual numbers, mule accounts, shell companies, payment aggregators , API services (account validation, document verification), cloud hosting, cryptocurrency, etc.

Therefore, it is advisable to involve experts in the field during an investigation.

The Home Ministry has stated that law enforcement agencies can call on the services of the National Cyber ​​Crime Forensic Laboratory (NCFL), one of the verticals of India’s Cybercrime Coordination Center (14C ), CEI Division for technical assistance on lending application analysis, malware analysis and cryptographic transaction tracing.

“All states and UTs are urged to take strong legal action in this regard. In addition, all states and UTs are also urged to educate all districts about the risks associated with the use of such apps,” it said. he declares.

A large number of China-controlled lending apps have recently engaged in predatory lending. Apart from engaging in unethical operations, these apps use loopholes in regulations and often operate in violation of existing rules and regulations.

Such apps emerged during the COVID-19 pandemic as many people across India were facing financial hardship and in need of funds, and these apps lent money for periods ranging from a 30 day week. These loan applications would charge high interest rates and processing fees.

Additionally, these apps often harass users for membership refunds, leading to reported incidents of dozens of suicides.

The Law Enforcement Directorate recently froze Rs 9.82 crore of China-controlled loan applications parked in merchant IDs with payment gateway companies.

The lending apps are part of an ongoing money laundering investigation against a “Chinese-controlled” investment token app, officials said.


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