Hyderabad cops dig out online money-lending scam, freeze 75 bank accounts

Raids were conducted in Hyderabad and Gurgaon and 16 people were arrested after three people committed suicide following 'harassment' by lenders

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The Hyderabad police claimed to have unearthed a multi-crore money lending scam and have frozen 75 bank accounts holding ₹423 crore. The fraudsters charged interest as high as 35 per cent per annum and conducted their operations via 30 mobile apps that were not approved by the Reserve Bank of India (RBI).

Simultaneous raids were conducted at multiple locations in Hyderabad and Gurgaon in Haryana and 16 people were arrested, NDTV reported.

The Telangana police swung into action after three people, reportedly harassed by money lenders, committed suicide.

The Hyderabad police arrested seven people. One of them is 32-year-old Sarath Chandra, who holds an engineering degree from the United States. Chandra ran the money-lending operations via two companies — Onion Credit Pvt Ltd and Cred Fox Technologies — started two years back.

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Chandra set up call centres in Gurgaon, Bengaluru and Hyderabad in January this year. The call centre employees would contact potential customers and convince them to borrow huge sums of money using multiple apps. Police said the call centre employees were trained to “abuse, defame and blackmail” victims to recover borrowed money with interest.

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About 1,000 people worked in these call centres. A good number of them were just graduates and were paid between ₹10,000 and ₹15,000 per month.

The police said the scam is huge by all standards and needs a “multi-city” probe. To avoid detection, money was routed through shell companies and multiple bank accounts using payment gateways and digital wallets.

The Reserve Bank of India (RBI) on Wednesday cautioned individuals and small businesses against such frauds. “These online platforms charge excessive rates of interest and additional hidden charges, adopt unacceptable and high-handed recovery methods and misuse agreements to access data on mobile phones of borrowers,” the RBI said.

The apex bank further stated that consumers should never share copies of Know Your Customer (KYC) documents with unidentified persons, unverified/unauthorised apps and should report such incidents to concerned law enforcement agencies.

Legitimate public lending activities can be undertaken by banks, non-banking financial companies (NBFCs) registered with the RBI and other entities who are regulated by state governments under statutory provisions.