Aaratrika Bal
Introduction
Lately, a number of Chinese loan apps got raided. These apps were based in Bengaluru. Since 2020, when the COVID pandemic broke out, the ED (Enforcement Directorate) had eyes on these online payment gateway locations. On 3rd September 2022, six such apps got raided by the ED. The raid happened mainly due to operational irregularities in these apps. All of them were operated by Chinese individuals, and the list includes Paytm, Cashfree, and Razorpay. Paytm had denied giving any statement related to this raid, while the other two companies mentioned that their operations complied with proper guidelines.
“Operations and onboarding processes adhere to the PMLA and KYC directions, and we will continue to do so. We extended our diligent co-operation to the ED operations, providing them the required and necessary information on the same day of inquiry,” said a Cashfree spokesperson.
A Razorpay spokesperson mentioned that they were successful in blocking suspicious accounts from their databases.
The recent raid took place on September 14th, 2022, in various places all over India.
The article will also help understand why it is necessary to frame stronger guidelines to regulate the functioning of loan apps in general. By the end of the write-up, it should be clear as to what led to the beginning of this massive investigation by the ED and the current situation.
Why Did the Raid Happen?
According to ED, these companies had laid down their operations in places that were not mentioned on the official MCA website. They also allegedly possessed fake addresses.
The PMLA, or the “Prevention of Money Laundering Act”, allowed the ED officials to do this investigation.
It is important to understand why the raid happened in the first place. The police found that these companies harassed many debtors. The access to personal information made things a whole lot easier for these loan app companies. ED has also mentioned seizing ₹17 crores worth of funds.
A similar case of loan app fraud happened in March 2022 as well. In this case, the culprits would share the profits with various Chinese entities through Cryptocurrency. A complaint was filed by a user under the following sections in March 2022: Sections 385, 419, and 420 of the IPC, along with 66 C and 66 D of the IT Act. This was when the investigation began. The app would also collect the personal data of the users in order to misuse them.
This probe aimed to investigate so many cases of susceptible debtors who chose to end their lives after not being able to pay the loans. It has been found that the COVID-19 pandemic has hit the economic status of many people all over the country. People have lost jobs, and thus many had to take loans for various purposes. This probe was initiated under the PMLA.
Brief Analysis and Current Actions
As had been mentioned before, the vulnerable debtors had been forced and harassed by the companies. Lately, many cases of this kind have been reported. The companies supposedly threatened the people to leak the personal details that they had collected initially. “Fake” addresses of these companies have also raised many eyebrows at this point. Due to the worsening situation, the RBI has proposed new laws to rectify the current scenario. RBI, along with the Ministry of Electronics and Information Technology, has decided that only genuine loan apps are to be present on app stores. Constant monitoring of the accounts would also be done by the RBI so there are no discrepancies. The meeting which decided these courses of action was chaired by the finance minister of India, Nirmala Sitharaman. It has been brought to notice that this chaos and misconduct had become more evident after the pandemic hit the nation. The RBI had also suggested that the central government develop more stringent guidelines and laws to protect the debtors from any kind of harassment by the loan apps.
Conclusion
It can be concluded that the economic condition of the country has given rise to these cases of harassment by loan apps. It is high time that strict laws are made in order to provide sufficient protection to the debtors. Recently, in the month of August, Google removed about 2000 personal loan apps from its app store. It is important to frame certain regulations to look after the accounts on these loan apps and their general functioning and operation. This article has already cited cases where Chinese loan apps had been targeted by the ED and had come to the limelight because of similar acts.
These actions, if taken on time, will benefit so many people and safeguard many from unnecessary harassment and fraudulent activities by certain loan apps.
In the end, it is important to stay safe and cautious while operating on the internet. That is one of the most effective ways to deal with such incidents.