The Indian government is preparing to take action against Chinese loan apps that have been accused of fraud. The Ministry of Corporate Affairs (MCA) could cancel the registrations and freeze the accounts of Chinese app companies that have been found to have committed fraud during the investigation.
A team from the MCA's investigation wing is currently finalizing its preliminary report. The team conducted a search operation and seizure action against Chinese loan companies last year. The team is now finalizing the investigation report on the search operation.
Chinese app companies are accused of luring Indians into online loan traps, cheating them, extorting money, and harassing them. A senior official told Moneycontrol, "The search operation and seizure action against Chinese loan apps in cases of violation of company law has been completed. These loan apps were raided in several cities including Mumbai, Delhi-NCR and Kolkata."
"The zonal teams will soon submit the preliminary report, after which the final report will be submitted to the MCA for action within 2-3 months," he added.
Triple penalty provision
"The MCA could consider taking action against Chinese loan apps, including freezing funds and cancelling their registration," the official said. Section 447 of the Companies Act deals with the punishment for fraud. Under this, a penalty of three times the amount of fraud can be imposed.
The Enforcement Directorate (ED) is also investigating Chinese loan app companies for money laundering. It is said that loan app companies have created a network to extort money through fake loan offers. Many people have been trapped in these loan apps.