Good morning [%first_name |Dear Reader%],

It was during the highs of the pandemic, when companies were downsizing and people losing their jobs, that illegal Chinese loan apps found their product market fit. There were simply enough desperate people willing to pay ridiculously high interest for very small loans. There was a crackdown, and several apps were removed from the app stores.

But they never fully vanished.

Groundhog day for digital lending 

Last week, the Reserve Bank of India (RBI) announced that it has cancelled the certificates of registration of five non-banking finance companies (NBFC). The action comes after the central bank found over 600 illegal loan apps operating in India last year. 

All five NBFCs have had their registrations cancelled because their digital lending operations were violating the RBI’s guidelines on outsourcing and the Fair Practices Code. According to the regulator, excessive interest rates were being charged on loans issued through partner third party apps, and borrowers were subjected to undue harassment for the purpose of loan recovery. 

Of these five NBFCs, at least two have Chinese directors on their board (though, the regulator did not point that out)—Shillong-based Jhuria Financial Services Private Limited and Delhi-based Chadha Finance Limited, which were fronts for loan apps such as MoNeed, MoMo, CashFish, Kredipe, RupeeLand, and Rupee Master.