SFIO wraps probe into 33 Chinese loan apps; Prosecution likely

SFIO investigation forms part of a broader multi-agency effort to tackle illegal loan apps

The Serious Fraud Investigation Office (SFIO) has concluded its probe into 33 Chinese digital lending companies – including entities such as Omlette and Jump Monkey – and submitted its reports to the Ministry of Corporate Affairs (MCA), a government source said.

"Prosecution is likely to be initiated in all cases,” the source told Moneycontrol. There are special courts designated for trying offences under the Companies Act, which falls under the purview of the Ministry of Corporate Affairs (MCA).

The findings are likely to trigger legal action under relevant provisions of the Companies Act and other penal laws, as the probe unearthed alleged financial fraud, hiding the beneficial ownership links to Chinese groups, and predatory lending practices. It is a part of the government’s larger crackdown on fraudulent digital lending platforms, particularly those with Chinese funding links.

Digital lenders

The SFIO investigation forms part of a broader multi-agency effort to tackle illegal loan apps that operate with opaque ownership structures and often engage in coercive recovery practices. Many of these entities are registered in India but are remotely operated from abroad, predominantly from China, and use shell companies to route and park funds.

In March 2025, Moneycontrol had reported that the MCA had identified 33 Chinese-linked companies for detailed investigation by the SFIO following preliminary findings of fund diversion and regulatory non-compliance.

The SFIO is a statutory corporate fraud investigation agency under the MCA, mandated to investigate complex financial frauds involving multi-disciplinary expertise. It draws experts from financial accounting, forensic auditing, law, information technology, and company law, and is empowered to recommend prosecution based on its findings.

Opaque ownership

“While it is difficult sometimes to track the funding sources for some companies, efforts are made to ascertain the beneficial ownership,” the source added. In several cases, companies were found to be hiding their ultimate beneficiaries.

On February 6, 2024, the Ministry of Finance informed Parliament that Google had suspended or removed over 2,200 fraudulent loan apps from its Play Store between September 2022 and August 2023. Many of these apps reportedly violated RBI guidelines or lacked proper registration.

RBI regulations

The RBI on May 8, 2025, issued comprehensive guidelines for digital lending, aimed at enhancing customer protection and fostering transparency in loan disbursals and collections.

The guidelines mandate that only entities regulated by the RBI or those partnered with regulated entities can engage in digital lending. They also require disclosure of all charges, consent-based data collection, and tighter control over third-party lending service providers.