The Ministry of Corporate Affairs (MCA) is expected to strike off approximately 400 Chinese companies across 17 states within the next three months due to incorporation and financial frauds. Over 700 Chinese companies are currently under investigation by the MCA, according to a government official.

“The inquiry into nearly 600 Chinese companies has been completed. We anticipate a significant number, between 300 and 400 companies, will be struck off. This includes loan apps, online job platforms, and other entities,” the official stated.

The Ministry of Corporate Affairs (MCA) has been investigating digital lending apps operating in India, focusing on issues such as predatory lending practices, fraud, and violations of financial regulations. In recent years, there has been increasing concern about the rise of these apps, many of which are linked to Chinese companies. These apps have been accused of aggressive tactics, charging exorbitant interest rates, and engaging in unethical practices, including harassment of borrowers.

When a company is struck off, it is removed from the official Registrar of Companies (RoC) and ceases to be legally recognised as a valid business. According to the official, “In most cases, these companies are either not available at their registered offices or have shifted to other businesses despite initial investments. These issues often involve incorporation-related and financial frauds. Some companies have Indian directors, but their bank accounts are operated from China. There are also companies that have had no transactions.”

Under Section 248 of the Companies Act, the process of closing businesses takes three months. Initially, a notice will be sent to the companies, allowing them time to respond. A second notice will follow after a month if there is no response. If the companies still do not respond, they will be struck off.

“The 300-400 firms likely to be struck off are based in 17 states, including Delhi, Bengaluru, Uttar Pradesh, Andhra Pradesh, Mumbai, and Chennai,” the official stated.

Further investigation has been ordered for an additional 30-40 Chinese companies, including those involved in mobile screen and battery manufacturing, based on initial inquiry findings. If these inquiries provide sufficient evidence, appropriate action will be taken, with further investigation pursued for any remaining concerns.

There has been increased scrutiny of Chinese investments and business activities in India. The Indian government has implemented various measures to enhance transparency and accountability in dealings involving Chinese companies, especially in sensitive sectors like technology, infrastructure, and finance.
 

Image source: Mint