Loan app scam: How the Chinese spread tentacles around India

Nepal police raided several illegal call centres run by the gang

The Mumbai Cyber Cell issued lookout notices for two Chinese nationals suspected to be the kingpins of the loan app scam wherein lakhs of Indians have been duped of thousands of crores since 2019. After two months of extensive investigation, the cops have now unearthed how the loan app scam started and flourished in the country. Cyber cops have found that the business was established in 2018 by a group of Chinese nationals headed by Liu Yi. Yi is also absconding in a money laundering case being investigated by the Enforcement Directorate. The Bhubaneshwar police, too, have issued a lookout circular against him recently.

As per the cyber experts who are probing the case, following extensive reportage by mid-day which compelled the previous government to take cognisance of the scam and issue directions to both state and Mumbai cyber cells to launch an investigation, the gang has been operating in India since 2019 and gained momentum during the pandemic in 2020. The officers have so far arrested 14 people from different parts of the country while investigating as many as 23 cases, which have since been clubbed, related to loan app scam and harassment by loan recovery agents.

Also read: Loan app scam: Nepal cops score a treasure trove of info in Mumbai cases

How it started

While cops have not revealed much details as the senior-most officers of the Mumbai police are likely to address a press conference today (Friday), sources told mid-day that the detailed investigation of over 200 such loan apps led them to two chinese nationals - Liu Yi and his associate.

A group of Chinese nationals headed by Yi came to India in 2018 and established the network in connivance with Indian nationals, said sources, adding that the Chinese nationals already had existing businesses in India, which were used to start the illegal digital lending business. The group allegedly left the country before the pandemic hit in 2020.

Illustration/Uday Mohite

The accused had allegedly already created and uploaded the loan apps on various app platforms like Play Store before arriving in India, said sources. While fake Indian addresses were used while uploading the apps, the email IDs used were traced to China, Hong Kong and Macau.

Operations

The Chinese nationals, instead of establishing call centres in India, hired Indian nationals for different positions. Some were hired as supervisors who would then go on to hire more people to make calls for loan recovery while some were hired to morph photos of borrowers. The probing officers also found that the gang advertised the apps on various mediums such as social media sites like Facebook, Instagram as well as TV channels. The advertisements stated that loans up to Rs 20,000 would be available in just one click with an interest of only Rs 400 for a week.

"The business gained huge momentum during the pandemic as a number of citizens lost their jobs and were struggling to make ends meet," an officer said. Meanwhile, the masterminds started investing in Nepal and opened illegal call centres, some of which were busted by Nepal police over the past two weeks in Kathmandu and Rupandehi.

Multiple layers to hide trace

The money required to run the scam was routed to India through hawala, and the existing businesses of the Chinese nationals played an important role in it, said sources. As the digital lending business started growing rapidly during the pandemic, the Reserve Bank of India took note of it and issued guidelines regarding digital lending in December 2020.

Now, in a bid to leave little to no trace during the transactions and to evade the eyes of investigating agencies, the accused used at least 10-12 layers for each transaction. As per the officers, the recovered money is rapidly sent from one UPI ID to the other for more than 10 times before converting it to crypto currency and then sending it to China. The cops have found millions of such UPI transactions.

Arrests so far

Cyber cops got the first lead in the case during the last week of June and arrested one accused from Andhra Pradesh identified as Sudhakar Reddy, 25, who led the cops to another five accused in Karnataka. These five accused, in turn, gave the police details of other accused in Gurgaon, Manipur, Haryana and Mumbai.

During the two months of investigation, 14 people were nabbed from different parts of the country. One of the accused arrested from Nainital in Uttarakhand, identified as Priyanshi Kandpal, 24, is said to be one of the main accused. Kandpal was found to be in direct touch with foreign nationals. She was tasked with collecting information from the main supervisors and translating them into Chinese and sending the same to the kingpins in China.

14
No of accused arrested in the case so far