Loan Taken in Your Name With Fake Papers? Delhi Police Bust Racket: What the Law Says

What happened?

Delhi Police have broken up a loan fraud racket. This is according to reports by Asianet Newsable, The News Mill and Millennium Post on 3 October 2026.

A woman from Burari runs a small business. She complained that her papers were used to take a Rs 7.30 lakh business loan in her company’s name. She says she knew nothing about it.

The loan was sanctioned in December 2023, the reports say. She learned about it much later, when her credit score (a number that shows how well you repay loans) was hurt. She had applied for a loan for her daughter’s education.

Police at the Cyber North police station say they traced a 36-year-old man to Sonipat in Haryana and arrested him. A 34-year-old woman from Dwarka was found and bound down (told in writing to join the probe).

How did the gang allegedly work?

According to the reports, the gang ran Telegram groups. They offered ‘loan help’ to people who needed money.

They collected Aadhaar copies, photos and bank details. Police say some people even gave up SIM cards linked to their bank accounts.

Then, police say, the gang used editing tools to make fake PAN cards, GST certificates and Udyam (small business) certificates. They sent these with a loan app. The OTP codes went to phones the gang controlled, so the real owner never got a message.

Police say the gang kept about 30% of each loan as its cut. Reports say about Rs 5.3 crore moved through linked bank accounts. Six cyber fraud complaints from other states are also linked, according to police.

Which laws apply?

The reports do not say which sections are in the FIR (First Information Report, the police’s first record of a crime). So here is what the law says about acts like these. All of it applies only if the allegations are proved.

Making a fake paper to cheat someone is forgery. Using a fake paper as if it were real is a separate offence. Taking a loan by lying about who you are is cheating, and cheating by pretending to be someone else is called personation.

Doing it through a phone or app can also bring in the Information Technology Act, 2000. Section 66C punishes identity theft. Section 66D punishes cheating by personation using a computer or phone.

What is the punishment? Can they get bail?

Cheating that makes someone hand over money or property (BNS 318(4)) can mean up to 7 years in jail and a fine. It is cognizable (police can arrest without a court’s permission) and non-bailable (bail is not a right; the court decides).

Forgery for the purpose of cheating (BNS 336(3)) also carries up to 7 years and a fine. It is cognizable and non-bailable too.

Using a forged paper as real (BNS 340(2)) gets the same punishment as the forgery itself. It is cognizable and bailable.

The IT Act sections 66C and 66D each carry up to 3 years and a fine of up to Rs 1 lakh.

What happens next?

Police will keep tracing the money and the other victims. They will check phones, SIM cards and bank records.

When the probe ends, they file a chargesheet (the final report) in court. The court then frames charges and holds a trial. Every accused is presumed innocent until a court finds otherwise.

Rights of the victim and of the accused

A victim can get a free copy of the FIR. She can ask the lender in writing for the loan papers and the application. She can also ask the credit bureau to fix wrong entries once the fraud is on record.

An accused person has the right to be told why he is arrested, to meet a lawyer, and to be produced before a magistrate within 24 hours. He can apply for bail.