India conducts searches at payment firms over alleged breaches by Chinese apps

Wednesday 7 September 2022 11:50 CET | News

India’s anti-money-laundering agency has raided offices of several payment services due to alleged misconduct of lending apps backed by Chinese nationals.


The Directorate of Enforcement said it had conducted search operations under the country’s anti money laundering act of the premises of Razorpay, Paytm Payment Services, and Cashfree Payments in Bangalore in Karnataka state. The agency has seized USD 2.1 million in suspicious bank accounts.

The agency added that Chinese-affiliated apps were involved in ‘extortion and harassment’ of locals who had taken out small loans. It added that the Chinese digital lenders had created criminal proceeds by using various merchant IDs and accounts while not operating from registered addresses. The office raids came a few days after India’s Congress raised the case of Chinese loan apps in India, with some accusing Indian prime minister of ‘keeping his eyes closed’.

India conducts searches at payment firms over alleged breaches by Chinese apps


Chinese lending apps taken into view

Local police in August 2022 disclosed a list of 18 Chinese instant loan apps, including Cash Port, RupeeWay, and LoanCube among others, linked to extortion allegations. The police claimed the lenders had coerced and harassed their customers by using ‘aggressive tactics to threaten them’.

India’s central bank stated that almost half, or 600, out of the 1,100 online loan apps available across various app stores in the country as of February 2021 were operating illegally. Google has also faced criticism for hosting some of these apps in the country.

Online lending apps have been on the rise since the pandemic sent the country’s economy reeling, leaving many young Indian professionals out of a job. Those in financial difficulty have sought out instant loan services to ride out short-term difficulties. Chinese digital lenders are popular with the younger generation. However, some Chinese apps have been criticised by local authorities for not operating from a physical local office and for employing aggressive debt-collection tactics.

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Keywords: lending, AML, regulation, financial services, digitalisation
Categories: Fraud & Financial Crime
Countries: India
This article is part of category

Fraud & Financial Crime