Suicides, Data Theft & South India’s Digital Loan Sharks

Police departments of Chennai, Bengaluru and Hyderabad are probing more than 150 instant loan apps. 

Published
India
4 min read
Police have identified over 358 bank accounts linked to 122 instant loan apps that were providing loans flouting norms and intimidating customers.
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In December 2020, three suicides were reported in Telangana. Apart from all three victims being in their twenties, there was another similarity to these suicides – all ended their lives because of harassment from online instant loan providers.

These suicides were an eye-opener for Telangana Police and in the investigation that followed, police have identified over 358 bank accounts linked to 122 instant loan apps that were providing loans flouting norms and intimidating customers.

Soon, Hyderabad Police realised that the neighbouring Bengaluru and Chennai cities too had reported similar cases and several arrests were made in these cities as well. In all three cities put together, currently, more than 150 instant loan apps are under the scanner.

These companies do not follow Reserve Bank of India (RBI) guidelines, their interest calculations start within seven days and interest rates vary from 20-50 percent. To top it all, the crimes allegedly involve data theft and Chinese connections.

Call Centres for Extortion

The Bengaluru and Chennai Police’s investigation into instant loan apps started around call centres operating out of Bengaluru. The city Central Crime Branch, on 28 December, arrested three persons who were running a call centre for loan apps run by Chinese companies.

This raid was a follow up to an investigation by the Karnataka Criminal Investigation Department (CID), which began after multiple complaints alleging intimidation from lending apps.

Bengaluru Police raided four companies and arrested five people, including a chief financial officer and a human resource manager. The arrested men were running the business using Chinese mobile apps, offering instant loans and charging exorbitant interest.

Around the same time, Hyderabad Police too raided two call centres in Bengaluru’s HSR Layout and apprehended K Eswar, admin of Anniu Pvt Ltd, native of Kurnool, and Madhusudhan and Satish Kumar, managers at Truthigh Pvt Ltd.

One of the call centres in Hyderabad raided by Telangana police. 
One of the call centres in Hyderabad raided by Telangana police. 
(Photo: The Quint)

The Ruthless Modus Operandi

The role of these call centres became clear with the arrests made by the Chennai Police. On 2 December, the Chennai city police arrested four people, including two Chinese nationals, who were allegedly part of instant app-based money lending racket operating out of Bengaluru.

A Chennai police officer gave an example of one case registered with them. In a complaint filed by one Ganesan, a resident of Vengaivasal, he alleged that after learning about the lending app from social media, he borrowed Rs 5,000.

“Within a week of taking the loan, he was asked to pay Rs 1,500 as interest for the loan. He was offered another loan from another app to repay the loan and so he did. As the amount increased, the apps increased the interest by 2 percent for every Rs 100 per day,” said a senior official.

When he defaulted the payments, Ganesan began getting abusive phone calls throughout the day. When he began ignoring these calls, his relatives started getting calls asking about his whereabouts.

In some cases, WhatsApp groups are made with family members and the defaulters’ photos with caption “fraud” are sent to them.

One of the messages sent by an lending app.
One of the messages sent by an lending app.
(Photo: The Quint)

Shika Goel, additional commissioner of police, Hyderabad said that one of the companies investigated by them had a bucket system. “If you fail to make the payment on the first day, you are bucket number one and if you fail you could go up to bucket 7. As you go up these buckets, the treatment, frequency of calls and calls to family members etc increase. The executives at these calls centres are given incentives for loan repayments,” she said.

The Information Theft

The calls made to relatives revealed that using these apps, the companies were getting access to the contact list and galleries of the customers. A senior Bengaluru CCB official said that the application’s server is based in China.

“So far in the investigation, we have learnt about how they were using this data to threaten the customers with dire consequences. In some cases, it included rape threats and sending obscene messages to members of the customer’s contacts. We are probing whether data was being sold outside,” said a Bengaluru senior official.

The China Connection

In their investigations into the case, Chennai and Hyderabad Police have arrested multiple Chinese nationals. Chennai Police arrested Chinese nationals Xia Ya Mau, 38, and Yuvan Lun, 28, while two others, Hong and Wandish, are said to have escaped to Singapore. Chennai Police Commissioner Mahesh Kumar Aggarwal said that two Indians approached the Chinese nationals seeing an advertisement to open a call centre in Bengaluru.

The two Chinese men arrested by Chennai Police. 
The two Chinese men arrested by Chennai Police. 
(Photo: Chenani police)

Similarly, Hyderabad Police arrested a Chinese national at Delhi airport when he was allegedly planning to flee to Frankfurt. Hyderabad joint commissioner of police (detective department) Avinash Mohanty said that the Chinese national operated companies in India which have done financial transactions worth Rs 21,000 crore in the last 6 months.

According to Hyderabad Police, two more Chinese nationals, Yi Bai and Zixia Zhang, are on the run. The trio had set up firms offering instant loans through apps in many cities, including Hyderabad and Bengaluru, he added.

Bengaluru Police has requested Hyderabad and Chennai Police to investigate the arrested men to find more links to instant loan cases they are investigating.

Currently, the Enforcement Directorate is getting involved in the investigation. At the same time, similar cases are being reported in Gurgoan in Delhi NCR. Meanwhile, the police departments in south India say the investigation so far has only touched the tip of the iceberg and the real magnitude of this Frankenstein’s monster that grew during the lockdown will be known in the coming weeks.

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