MCA Probes Loan Apps for Fraud Allegations

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MCA Probes Loan Apps for Fraud Allegations

The Ministry of Corporate Affairs (MCA) is investigating several loan applications (apps) for potential violations of Company Law. This inquiry stems from allegations of fraudulent activities by these companies.Sources indicate that the investigation will focus on the fraud angle, regardless of whether the apps are domestically or internationally funded. The MCA is currently finalizing a report on the matter and is expected to take legal action once it is complete.The scope of the investigation extends to those responsible for fraudulent practices, who may face imprisonment for not less than six months to ten years and fines exceeding three times the amount involved in the fraud.The prevalence of fraudulent loan apps has prompted government and regulatory action. The Financial Stability and Development Council (FSDC) recently emphasized the need to address the harmful effects of unauthorized lending through online platforms.The FSDC members also acknowledged the importance of strengthening inter-regulatory coordination to foster a robust financial sector capable of supporting economic growth. Notably, MCA Secretary Manoj Govil attended the meeting.