Hyderabad police find ‘Chinese link’ in instant loan apps cases that ‘drove 3 to suicide’

Police say unauthorised lenders shamed, harassed and even threatened borrowers online, links have been found to Indonesia and a 'Chinese national'.

Logos of some of the 'instant loan' apps under investigation by the Hyderabad police | Image: Ramandeep Kaur | ThePrint

Hyderabad: The Hyderabad police has said the apps offering ‘instant loans’ to customers and allegedly harassing them later for recovery — alleged to be the reason behind the recent suicide deaths of three individuals — have links to Jakarta (Indonesia) and to a ‘Chinese national’.

The three police commissionerates in the city — Hyderabad, Cyberabad and Rachakonda — have received a total of over 60 complaints of online harassment against app-based lenders.

Most of these phone apps were not approved by the Reserve Bank of India (RBI), according to the police.

As part of the probe, the Hyderabad Commissionerate conducted raids at call centres in the city as well as in Haryana’s Gurugram, where hundreds of employees were assigned the task of calling up clients, harassing them for not repaying the amount, shaming them online, and even threatening them, the police said at a press conference Tuesday.

A few of the apps named by the police include Cash Mama, Loan Zone, Dhana Dhan, Cash Era, Cash Lion, Mastermelon, Lucky Wallet and Coco Cash.

The RBI Wednesday cautioned individuals and small businesses against falling prey to such unauthorised digital lending platforms promising loans in quick and hassle-free manner.

Commissioner of Police Anjani Kumar said the call centres in Hyderabad and Gurugram were being run on behalf of four companies — Liufang Technologies Pvt Ltd, Hotful Technologies Pvt Ltd, Pinprint Technologies and Nabloom Technologies Pvt. Ltd — registered in Bengaluru.

The police didn’t specify which apps these call centres served.

“The 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… The raid in Gurugram led us to a copy of a Chinese national’s passport,” Kumar added.

“According to our information, a Chinese national had come to Hyderabad two-three months ago, set up everything and left. This foreign links issue is a matter of investigation,” he said.

The Hyderabad Police took 11 people into custody following the raids, while 700 laptops, servers and computer systems were seized.

More than 50 complaints were registered with the Rachakonda commissionerate, and at least nine under Hyderabad Police Commissionerate limits. The Cyber Crime Police Station is also part of the probe, and has registered 16 FIRs.

The Cyberabad Police registered seven cases and arrested six persons, including directors of two of the companies operating these apps.

Modus operandi

In most cases, these apps or companies were not registered or recognised by the Reserve Bank of India as a non-banking financial company (NBFC), the police said. The Cyberabad Police, in charge of Hyderabad’s IT hub, arrested directors of Onion Credit Pvt Ltd and Credfox Technologies Pvt Ltd, and said these companies entered into agreements with NBFCs.

Together, the companies have 1.5 lakh customers, about 70,000 of whom are currently active.

“The companies have two nodal accounts — one pools up the amount from NBFCs and disburses 75-80 per cent of loan amount by deducting various charges like processing fees, GST, etc. The loan amount paid by the customers comes to the other nodal account, which in turn, pays it to the NBFCs,” Cyberabad Commissioner V.C. Sajjanar said.

According to the police, the rate of interest they charge is as high as 100 per cent in some cases. It was mostly seen that the payment was done using online wallets, gateways etc. There are at least 80 such apps in use and available on the Google Play Store.

Once the loan became due, borrowers began receiving hundreds of calls in a day, threatening that their families and relatives would be told about the loan default, the police said, adding that WhatsApp and other social media groups were created in which the families of the borrower were added and then humiliated, and calls were made to family members informing about the borrower’s loan. In a few cases, the complainants told the police that they were threatened with “dire consequences”.

Most of the apps, downloaded from the Google Play Store, asked the users to ‘allow’ access to their contact list, photos, messages etc, the police said. Once a user agreed to it, they added, the host got access to all information on the phone, which is how they got the borrowers’ contacts.

Commissioner Kumar also said the issue will be taken up with tech giant Alphabet Inc. (which owns Google) as part of further inquiry, since the apps are available on the Play Store.

The RBI, meanwhile, acknowledged the reports of people falling prey to these digital platforms charging excessive rates of interest and adopting “unacceptable and high-handed recovery methods” and misusing agreements to access data on the mobile phones of borrowers.

“Members of public are hereby cautioned not to fall prey to such unscrupulous activities and verify the antecedents of the company/ firm offering loans online or through mobile apps,” the central bank said in a statement.

It said legitimate public lending activities can be undertaken by banks and NBFCs registered with the RBI and other entities who are regulated by state governments under statutory provisions.

Cases in Hyderabad

The most recent complaint was registered at the Saidabad police station Saturday, after a borrower alleged that he was being publicly shamed and threatened by an app-based instant loan provider. The man had borrowed a sum of Rs 30,000 from an app named ‘MY BANK’, and was asked to pay Rs 55,000 within a week, according to the police.

Inspector K. Srinivas said the company’s management started blackmailing the man, morphed his photos, called him about 400 times in a short period, and used foul language. The company is said to have created about 10 WhatsApp groups, including his family, friends, relatives etc., and called him a fraud and shared his morphed photos.

Rachakonda ACP Harinath added that in one of the major complaints registered by this commissionerate, the borrower used 122 such apps to take loans. “He probably started using more apps to repay old ones,” the ACP said.

One of the three persons who allegedly killed themselves following a mental trauma after being harassed was a 29-year-old techie who used over 30 such apps to take instant loan, according to the police.

The police are continuing the probe for further leads, and appealed to people to not download any random instant loan offering apps without conducting proper background checks. They have also alerted people against sharing their bank credentials.