MCA to remove around 400 Chinese online loans and jobs companies for harassing users and financial fraud: Report
The Chinese companies under investigation are found to have committed financial fraud and the loan apps are said to have harassed users
The Ministry of Corporate Affairs (MCA) may strike off as many as 400 Chinese companies dealing in online loans and online jobs in 17 Indian states including Delhi, Mumbai, Chennai, Bengaluru, Uttar Pradesh, and Andhra Pradesh, over the next three months for incorporation-related and financial frauds, Moneycontrol reported, citing an anonymous government official.
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The MCA has also ordered investigations on another 30-40 Chinese companies, including ones which are mobile screen and battery manufacturers.
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“The inquiry on almost 600 Chinese companies stands completed. There will be a substantial number of anywhere between 300-400 companies which will be struck off," Moneycontrol quoted the official as saying. "These include loan apps, online job companies, etc.”
Why is the MCA planning to strike off these Chinese companies?
The MCA has been investigating loan apps performing predatory lending practices, fraud or violating financial regulations, due to concerns surrounding the proliferation of digital lending apps in India, some linked to Chinese companies.
These companies have been accused of using aggressive tactics, charging exorbitant interest rates, and harassing borrowers.
Some of the companies have an Indian director, but with a Chinese bank account and no recorded transactions. In some cases, the companies are not available at the registered offices. In other cases, investments are there, but they are into other businesses, indicating financial fraud, the report read.
Section 248 of the Companies Act says that striking off companies takes three months wherein a notice is first sent to them, giving them time to respond. After one month, a second notice is sent. If there's no response still, the company is struck off.