The Union Ministry of Home Affairs has asked all the states and union territories to take urgent actions against the Chinese Lending Apps. The home ministry said the issue has caused a serious impact on national security, economy and citizen safety.
It has been explained that these apps are causing harassment, blackmail and harsh recovery practices by such Chinese controlled entities, which have led to multiple incidents of suicides.
A large number of Chinese-controlled loan apps have been found to be indulging in predatory lending in the recent past. In addition to indulging in unethical operations, these apps utilize loopholes in the regulations and often operate in violation of existing rules and regulations.
It has been concluded that such apps came up during the COVID-19 pandemic when many people across India faced financial hardship and needed funds. These apps lend money for periods ranging from a week to 30 days and would charge high-interest rates and processing fees.
Often these apps have been found to be harassing users over the repayment of their dues, leading to reported incidents of dozens of suicides.
It has been claimed that a large number of complaints have been reported across India related to illegal digital lending apps that provide short-term loans or micro-credits at exorbitant interest rates with processing or hidden charges, especially to vulnerable and low-income group people.
A statement from the communication said, “Harsh recovery practices followed by these illegal lending apps have claimed many lives across India. This issue has caused a serious impact on national security, economy and citizen safety,”
The lenders use the borrowers’ confidential personal data like contacts, location, photos and videos for blackmail and harassment.
The home ministry said these illegal lending apps that may not be Regulated Entities (RE) by the Reserve Bank of India are using bulk SMS, digital advertisement, chat messengers and mobile app stores on a massive scale.
The borrower has to provide mandatory access to contacts, location, and phone storage in order to avail loans.
The states and UTs were told that the data achieved from the above mentioned details is misused to harass and blackmail the citizens using morphed images and other abusive practices by recovery agents located in India as well as overseas violating RBI’s Fair Practices Code.
Investigations have been conducted by various agencies and it was found that this is an organised cybercrime executed using disposable emails, virtual numbers, mule accounts, shell companies, payment aggregators, API services (account validation, document verification), cloud hosting, cryptocurrency, etc.
Therefore, it has been advised to involve domain experts during an investigation.
According to the home ministry the law enforcement agencies can avail the services of the National Cyber Crime Forensic Laboratory (NCFL), one of the verticals of the Indian Cyber Crime Coordination Center (14C), CIS Division for technical assistance on loan app analysis, malware analysis and crypto transaction tracing.
The officials said that theses lending apps are part of an ongoing money laundering investigation against a “Chinese-controlled” investment token app.