Chinese micro-loan scam had a Bengaluru address

Police raided an office near Marathahalli and found it using 52 companies and 80 bank accounts. They say it lured borrowers

A Chinese-owned network was cheating gullible borrowers in India, and used Bengaluru as a hub for their activities, police say.

The shadowy network uses mobile apps to lure borrowers. It had also hired agents, promising them Rs 4,000 as a monthly incentive.

On November 24, the Central Crime Branch arrested Kamaraj More, HR executive, and Darshan Chowhan, team lead, employed by Licorice Technology, allegedly a Chinese-funded company.

They used the names of 52 companies and had opened 80 bank accounts over the last two years, police say.

A police team raided the company’s office, working with 100 employees, in Munnekolala, near Marathahalli, and confiscated 83 computers. City Police Commissioner Kamal Pant told Metrolife the Chinese companies use Indian employees and use them as a front.

“They open a firm and appoint managers and directors to run the show, but never make an appearance in person,” he says.

How they operate

Jagannath Rai, assistant commissioner of police (economic offences wing), who investigated the racket, says Chinese firms use mobile apps with catchy names.

“You can download these apps from the Google Play Store. As soon as you download the app, it asks for access to all your contacts and other details. Only after you agree can you proceed,” explains Rai.

The loan sanction is easy and painless, but the catch is in what comes later. “An exorbitant amount is charged as processing fee. For instance, if Rs 5,000 is sanctioned, Rs 1,000 is deducted as processing fee. If you fail to pay, then their call centre staff call repeatedly,” explains Rai.

The hiring documentation is hard to fault, but their methods are unethical, police say.

“The frauds collect Aadhaar and PAN cards from the staff they employ,” Rai explains. If borrowers default on repayment, the companies use fake arrest warrants and send humiliating messages to all contacts on the contact list.

“They get access to your personal details and use it against you. They use your pictures on all sorts of websites and send them to people on your contact list to shame you,” says Pant.

In Hyderabad last year, three people committed suicide after they were sucked into such a racket. “After these companies make their money, they shut their businesses and move on. The paperwork is perfect and they make sure they don’t hit any legal hurdles,” he says.

The borrowers are largely auto drivers, pushcart vendors and people who run small businesses.

“The companies first lend them Rs 500 and ask them to download the app. The borrowers realise they have been duped only when the interest keeps soaring and the loan is never fully paid. It is like they are trapped in debt for life,” explains Rai.

A senior policeman says money lending indirectly fuels the growth of the underworld.

“If you happen to visit City Market in the wee hours of the morning, you will see money lenders giving loans at 10 per cent interest per day. Today, the business has gathered momentum online,” he says.

The lending mafia thrives because people easily get loans with zero paperwork, he says. “Borrowing
is rampant in India because the
culture is such. Every marriage, naming ceremony and birthday is celebrated in a grand manner,” he adds.

Why these lending apps are dangerous

They collect all your phone contacts.

They get access to photos on your phone.

They harass your family if you default.

They call your friends and run you down.

They post your pictures on disreputable websites.