Home Ministry accepts that Chinese loan apps are a nuisance

Chinese loan apps: “There are two ways to conquer and enslave a country: the first one is by sword and the second is by debt.” This was said by American statesman John Adams, and it seems that his saying goes well with one of India’s neighbours. I hope you can guess it. Yes, it’s China. Why am I saying this? Well, for that, let’s do a tour from Tajikistan to Sri Lanka to Laos.

In 2011, China secured 1,158 square kilometres of strategic territory from Tajikistan, not through some war, but in exchange for debt forgiveness. Next is the Hambantota Port in Sri Lanka, which has been transferred to Beijing along with more than 15,000 acres of land around it on a 99-year lease. The transfer of the Indian Ocean region’s most strategically located port in late 2017 was seen in Sri Lanka as the equivalent of a heavily indebted farmer giving away his daughter to a cruel money lender.

This is China’s agenda for neocolonialism; its debt trap diplomacy has not even spared its closest ally, Pakistan. For the same purpose, China has come up with its BRI (Belt and Road Initiative) as the front, which helps Beijing begin as an economic partner of a small or financially weak country, only to gradually become its master. The Chinese loan apps are no different.

Economy and Loans

India recently surpassed its former coloniser, Britain, to become the fifth largest economy in the world. And it is expected to further rise to become the third largest economy in the world, surpassing Germany and Japan. But did it become possible in just 75 years of independence? Thanks to easily available loans to the MSMEs and to the common masses as well, which complemented the economic policies of the government and kept India afloat when the large economies were shrinking post-COVID and the Russia-Ukraine crisis.

Now, with easier access to loans from legitimate sources, many wolves have penetrated the Indian loan market, that has caused several suicides, and these instant loan apps are owing to Chinese origin.

Also read: China is now crying hoarse over India’s Chinese app ban

Chinese Loan Apps: The Loan Wolves of China

Recently, India imposed a ban on loan apps, owing origin or allegiance to China, which included the Raise Casg app, Cash Ray app, Infinity Cash app, Kredit Mango app, HDB loan app, Cash light app, Minute Cash app, among others.

But here the question is what compelled the Indian establishment to take such stringent action against mobile applications. Well, how these apps work has the answer to this question. These apps were used by the elderly, youngsters, and rural folks who had limited knowledge in tech and economic policies, and the Chinese loan apps sanctioned loans without clarifying the proper terms and conditions.

Most of the time, the ones taking it were unaware of the interest rates that it demanded. Chinese loan apps were being taken from anniversary to birthday, for buying gifts to throwing a party; these loan apps had become a go-to option.

The working of Chinese loan apps is a concern

Suppose a person is in desperate need of a small amount, like Rs. 10,000, and he cannot ask for help from friends or family. In addition, he has destroyed his credit score by not paying his earlier legitimate loans on time, so that door is also closed. Now, what the person in need will do? He or She will search for instant loans on lending apps. The applications, without asking for any details like Aadhar or Pan, lend the amount in exchange for just a phone number and current address. While the one taking the loan is busy spending it, the loan app is busy with the plan to collect it back.

Its preparation includes hacking into users’ phones, gathering call log information, and learning the specifics of their frequent calls. The interesting thing about it is that they do it by requesting access from users in order to stop fraud and other things.

In other words, the fact that they are engaging in criminal activity is not the issue here. The primary issue is that they are using illegal methods to accomplish their goals.

When the borrower no longer pays back loans on time, they now repeatedly phone him to harass him and apply subtle compulsion. If the loan is not repaid within one or two days, the person faces social embarrassment. They call their friends and family and offer them a thorough overview of their financial situation. Threatening calls are the last stage. The borrower is warned that the recovery agent will take every drop of blood from him in order to reclaim the money.

Also read: Banned Chinese Apps make a comeback to the Indian Market with new unassuming names

The Modi government is up in arms against the loan apps

In September this year, it was reported that the RBI was preparing a list of legal loan apps in India. This was decided in a meeting chaired by the Finance Minister of India, Nirmala Sitharaman, where she had expressed grave concerns about the impact of such loan apps on poor and vulnerable section. The list of legal apps was to be transferred to the Meity as well.

In a recent development, the Ministry of Home Affairs asked the law enforcement agencies of states and UTs to take urgent action on such apps as they have “caused serious impact on national security, economy, and citizen safety”.

The ministry’s communication sent to all state chief secretaries and UT administrators on October 28 said: “Large number of complaints have been reported across India pertaining to illegal digital lending apps that provide short-term loans or micro credits at exorbitant interest rates with processing or hidden charges, especially to vulnerable and low-income people, and use the borrower’s confidential personal data like contacts, location, and photos/videos for blackmail/harassment.”

The Ministry has acknowledged that these apps are not regulated by the RBI and are using bulk SMS, digital advertisements, chat messengers and mobile app stores on a massive scale. These apps are violating RBI’s fair practises code by using abusive practises and morphed images.

The home ministry also stated that following an investigation, it was discovered that this was an organised cybercrime carried out using disposable emails, virtual numbers, mule accounts, shell companies, payment aggregators, API services (account validation, document verification), cloud hosting, cryptocurrency, etc.

Thus, the ministry has asked the law enforcement agencies to avail the services of those who are expert in this domain, like the National Cyber Crime Forensic Laboratory or the Indian Cyber Crime Coordination Center.

Not only will action be taken by the states and UTs, but focus will also be laid on spreading awareness on the matter so that no one gets trapped in the nefarious Chinese loan apps owing to unawareness.

Also read: India bans another 54 Chinese apps

The days of Chinese loan apps are numbered

In the history of independent India, taking credit has been one of the biggest problems for both governments and common citizens. Although schemes like the Jan Dhan Yojana have made things super easy and accessible, it was during the COVID-19 pandemic that these apps made their foray into India.

Now, however, these apps can count their days, as they are numbered in India. India had paid enough of the human cost of the fraud. There has been a persistent threat of security implications, as these apps were harvesting Indians’ data. Now, the Home Ministry has done what was required.