The Ministry of Corporate Affairs (MCA) is preparing to strike off as many as 400 Chinese companies operating in India due to severe financial irregularities and incorporation-related fraud. These companies, which primarily deal in online loans and job services, are spread across 17 states, including key areas such as Delhi, Mumbai, Chennai, Bengaluru, Uttar Pradesh, and Andhra Pradesh. According to a report by Moneycontrol, which cited an anonymous government official, the action is expected to be completed within the next three months.
The MCA has been investigating nearly 600 Chinese companies, focusing on those involved in digital lending and online job platforms. The official stated that the investigation phase has concluded, revealing that 300 to 400 of these companies are likely to be struck off the register.
The primary reasons for this drastic action include predatory lending practices, financial fraud, and violations of India’s financial regulations.
These Chinese companies have come under scrutiny for a variety of reasons. Many of them have been accused of engaging in aggressive tactics to recover loans, imposing exorbitant interest rates on borrowers, and resorting to harassment.
Additionally, several companies have been found to have Indian directors but operate with Chinese bank accounts, with no recorded financial transactions in India. This has raised suspicions of money laundering and other financial crimes. Furthermore, some companies were not found at their registered office addresses, while others were discovered to be investing in businesses unrelated to their stated purpose, further indicating potential financial fraud.
Under Section 248 of the Companies Act, the process of striking off a company from the register takes approximately three months. The MCA first issues a notice to the company, allowing time for a response. If the company fails to respond, a second notice is sent after one month. Should there be no reply even then, the company is removed from the register.
This sweeping action by the MCA underscores the Indian government’s ongoing efforts to regulate the digital lending space and ensure financial transparency, particularly in light of the growing concerns around the proliferation of predatory lending apps in the country.
