A month after the Telangana Police began the crackdown on illegal instant loan apps following the suicide by five persons, the investigation showed a deeper Chinese link to the scam. The Telangana High Court on Thursday directed the Director-General of Police to take immediate steps to block illegal instant loan apps. In the last month, more than 30 accused including four Chinese nationals were arrested by Hyderabad, Cyberabad, and Rachakonda police, the three commissioners which cover Greater Hyderabad. But that might just be a tip of an iceberg.

An investigative piece by The Morning Context has revealed a shocking China link that goes beyond backing predatory loan apps. A non-bank fintech lender (NBFC) has made the headlines for all the wrong reasons. PC Financial Services Pvt. Ltd, based out of Gurugram, has a face of Indian management, when in fact nothing is moved without the approval of Chinese heads - who conveniently hide behind the curtains and rake in fortune at the expense of Indians' misery.

China-backed predatory lender made fortune

The Chinese link

According to the TMC report, PC Financial controlled by Chinese firms, made a whopping Rs 1,320 crore in a single year. The company has existed for over two decades, but only shot to fame in 2018 after it was acquired by Opera, which took the company into predatory loan business. Having many such predatory apps and subsidiaries to its name - all catering to the financial gains of Chinese firms, who are running the show from the background.

For instance, PC Financial's board members include Raghuvir Gakhar, the CEO, Vaibhav Mishra, director, Shishir Hitesh Shah, director and Ajaya Sahoo, independent director. But as evidence and testimonies gathered by TMC, no file is moved from one desk to another without the go-ahead of Chinese heads, who chose to remain off any public records. However, an official named Mars Zhang, who runs the show in India according to many former workers at PC Financial, has only the manager post listed on LinkedIn but a document filing by Opera identifies him as the CEO of PC Financial.

"I was an operations manager, if I needed anything, I had to first take the approval of Chinese heads. No matter whichever position you are in in the company, not a single thing will move without the approval of those guys. And whatever work will be done in the back-end, and their back-end was based out of Beijing. App development or any changes on apps needed to be done was done by them," one former employee was quoted as saying by the TMC.

PC Financial

Riding high on misery of Indians

The dominance demonstrated by the Chinese heads in PC Financial wasn't limited to signing the necessary documents and giving a go-ahead whenever necessary. They were involved in day-to-day operations as well and that didn't bode well for the employees.

"They were very rude to Indians. They used to treat us like labourers. Chinese sat in all five buildings. There were so many," the collections head told the paper.

Besides this, due to the lack of proper management, employees were fired left, right and center - many without pay. During the pandemic, PC Financial allegedly laid off 70-80 percent of its workforce, around 35 managers were put on leave without pay and eventually let go.

But it is not the employees alone who had to bear the brunt of these dominating Chinese heads, who pressurized them into meeting targets while recovering disbursed loans. Those who actually fell into the debt trap using apps like Cashbean, Creditbean (obsolete) and Nanopay were harassed, threatened and abused.

China-backed predatory lender made fortune

The report revealed that PC Financial distributed instant loans to over 100,000 customers every day. At the end of the fiscal year in March 2020, the company had disbursed Rs 9,390 crore worth of loans. The collection target on employees was so intense, some agents would note down borrowers' numbers and call them from outside the offices, where the language was more abusive and threatening.

The employees, TLs were only given targets, mostly in crores, but no one had access to how much money was pooled in. "They segregate collections in a few buckets. They never told us the amount, they only told us in percentages. This is our percentage target, and we require this much every month etc. It was in crores. Because they never showed us that data. Because the Chinese don't trust Indians. They will only tell us what they think we need to know. In the back-end process, there was no interference from any Indians," a former head of collections was quoted as saying.

Following the money trail

The business model of PC Financial had picked off, no matter the cost. The company kept all the profits in the company to throw the scent off of what was going on. But in fact, the money was being sent to Chinese firms, which reflected in expenses. Out of Rs 1,055 crore expenses in 2019-20, over Rs 400 crore was moved out of India.

Chinese currency
Representational Image].Reuters

The financial dealings were made complicated by design as showed by TMC.

"All we knew was [PC Financial] was growing bigger and bigger. However, there are few issues, and I don't know how they will come out of it. The problem is with the major chunk of the profits that they are taking out of the country," a senior executive at a Bengaluru-based NBFC told TMC.

Still flying under the radar

With all these shady businesses, PC Financial managed to fly under the radar, even when there are active investigations going on to shut down illegal instant loan apps backed by Chinese firms. Not just that, Google event launched a major surgical strike on short-term loan apps globally, banning them but on the condition that full repayment cannot be required in 60 days or less.

Neither of those things stopped PC Financial. While managed to keep the law out of its dealings, it even tricked Google's policy to continue offering short-term loan apps.

"PC Financial easily managed to come up with a workaround. For example: They gave loans of let's say Rs 3,000, they will recover the principal + interest amount, i.e., some Rs 2,500 on 15th day only, and used to take processing fee + GST of around Rs 500 when the second due date approached, that is 62nd day. They used this technique," one of the former employees told TMC.