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Crackdown on illegal instant loan apps; 17 arrested from Delhi, Gurgaon, Hyderabad

Based on complaints, the Hyderabad and Cyberabad police have registered 16 and 7 cases, respectively, against such companies.

By: Express Web Desk | Hyderabad | December 23, 2020 10:30:06 am
The Cyberabad police registered a case under sections 420 (cheating), 506 (criminal intimidation) of IPC and also invoked section 66 of the IT Act, section 3, 10, and 13(1) of the Telangana Money Lenders Act and started an investigation.

Cracking down on illegal app-based instant microloan lending companies, Hyderabad police arrested 11 persons from Delhi, Gurgaon and the Cyberabad police arrested six others here. Based on complaints, the Hyderabad and Cyberabad police have registered 16 and 7 cases, respectively, against such companies.

In the past couple of weeks, three persons including a jobless techie and an agriculture extension officer have ended their lives allegedly owing to harassment from representatives of such apps over repayment of loans. Telangana DGP’s office had stated that at least 60 such loan apps available on Google Play Store were not registered or recognised by the Reserve Bank of India as an NBFC and their operations were unlawful.

Cyberabad police, acting on a complaint, raided the premises of city-based Onion Credit Private Limited & Cred fox technologies Private Limited and arrested the CEO and director K Sarath Chandra along with two other directors, two collection agents, and a team leader.

The complainant had told police that he downloaded an app named ‘Cash Mama’ in January 2020 from the Google play store and uploaded his Aadhaar card, PAN card, self-authentication photo, three months bank statement, etc, for a loan of Rs 5,000 to be repaid in 7 days. The company deducted Rs 1180 towards GST and processing fees and credited Rs 3820 into his bank account. Similarly, he took a loan six more times from the same app. He told police that he was suggested similar loan apps like ‘Hey Fish’, ‘Monkey cash’, ‘Cash Elephant’, ‘Loan Zone’, ‘Cash Zone’, ‘Water Elephant’, ‘Mera Loan’ etc.

Over 8 months, he availed a total loan of Rs 30,000 but was given only Rs 20,000 after deductions. But he ended up paying back Rs 29,000 even after which the loan was not cleared. He was asked to pay up Rs 8,634 more, following which the representatives of the companies started harassing and blackmailing him with dire consequences. They also accessed his contact list from his phone and started contacting his family members and abused them in filthy language, he said in the complaint.

The Cyberabad police registered a case under sections 420 (cheating), 506 (criminal intimidation) of IPC and also invoked section 66 of the IT Act, section 3, 10, and 13(1) of the Telangana Money Lenders Act and started an investigation.

Cyberabad police sends notices to 9 NBFCs

Cyberabad Police Commissioner VC Sajjanar, speaking to media, said the companies are collecting 35 percent interest from customers, imposing huge penalties on those who fail to repay, and harass the defaulters. Both the companies established by K Sharath Chandra have entered into agreements with 9 NBFCs for acquiring customers, marketing, checking creditworthiness, loan origination, disbursement, and collection. As many as 110 persons are employed in these two companies in Hyderabad.

“In this case, notices have been issued to all NBFCs and their managing directors, and also notice to Google has been addressed to take down the applications because of their criminal activities,” said the police commissioner.

“Dhana Dhan” application is not linked with any NBFC whereas “Cash Mama” and “Loan Zone” mobile applications have a tie-up with 9 NBFCs located in Delhi, Mumbai, Bengaluru, and Nagpur. ‘Cash Mama’ app linked to Onion Credit and ‘Dhana Dhan Loan’ app and ‘Loan Zone’ app linked to Cred Fox Technologies have a customer base of 1.5 lakh customers, of whom 70,000 are active at present, the Commissioner said.

Different buckets for defaulters:

Speaking about the operations of these companies, he said that customers are divided into different buckets. Customers on the due date are put in the D-O bucket, those in the first three days of defaulting loan are put in the S1 bucket, those between 4 and 10 days of defaulting are in the S2 bucket, and those between 11 and 30 days are in S3 bucket.

“To recover the loan from customers they practice different methods depending upon the bucket they are in, lesser the day after the due date, lesser the treatment otherwise treatment will be very harsh, threatening and abusive. They also access the contacts of relatives and friends of the customers and send them WhatsApp messages defaming the defaulter,” he said.

The police also found out that the companies have 2 nodal bank accounts. One, that pools up the amounts from NBFCs and disburses 75-80 percent of the loan after deducting various charges and other, where amounts repaid by customers are collected and in turn paid to NBFCs. As many as 18 bank accounts belonging to these two companies with Rs 1.52 crore in them have been frozen.

The investigators found that the companies owned by Sharath Chandra developed their apps for maintaining the database of the customers and placed them in the Google play store for easy download by customers. Both the companies, i.e., Onion Credit and Credfox Technologies designed mobile Apps namely ‘Cash Mama’, ‘Loan Zone’, ‘Dhana Dhan Loan’, ‘Cash Up’, ‘Cash bus’, ‘Mera Loan’ and ‘Cash Zone’.

They also sold two Apps i.e., ‘Cash bus’ and ‘Cash Up’ to Asia Inno Networks Pvt. Ltd., Delhi, and two Apps i.e., ‘Mera loan’ and ‘Cash Zone’ to Blue shield Fintech Pvt. Ltd., Bangalore.

Hyderabad police suspects links to China

Meanwhile, the Hyderabad police raided two locations in Gurgaon and three other locations in Hyderabad where call centers were being operated on behalf of four companies. These tele-callers were found to be persuading, harassing, and intimidating the loan defaulters.

Speaking to the media, Hyderabad police Commissioner Anjani Kumar said that these call centers were being run on behalf of four companies- Liufang Technologies private limited, Hotful Technologies private limited, Pinprint Technologies, and Nabloom Technologies private limited. They have their registered offices in Bengaluru, and the call centers employed 500 tele-callers in Gurgaon and 600 in Hyderabad.

“These callers took instructions from their heads in Indonesia. The entire operation of these loan Apps appears to be run with Chinese nationals at the helm. This was also indicated during an investigation into the multi-crore colour prediction gaming App scam where crores of rupees were transferred to shell companies which were registered as NBFCs,” he said.

The raids at the call centers have led to the seizure of nearly 700 laptops, servers, computer systems, etc. Further investigation is on to find out the web of financial transactions, funding, technology base, etc, he added.

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