Enforcement Directorate (ED) tied funds over Rs 72 crore to a non-bank financial corporation (NBFC) in money laundering investigation against app-based loan companies mobile phone companies that were “flush with investments” from China and Hong Kong, the agency said on Wednesday.
He said an interim order had been issued under the Prevention of Money Laundering Act (PMLA) for the seizure of funds of Rs 72.32.42.045 found in bank accounts and payment gateway accounts of Kudos Finance and Investments Private Limited, an Indian NBFC company, and its fintech partners.
The action concerns an ED investigation against “a number of Indian NBFC companies and their fintech partner mobile apps (apps) that have been booked by Telangana Police into several FIRs for illegal lending and for using extortion means to recover exorbitant interest rates from their customers.
The ED investigation found that various Indian companies “flush with investments” from China and Hong Kong had created memoranda of understanding with defunct NBFCs and given security deposits in the name of “performance guarantees.”
“NBFCs have opened up separate merchant IDs with payment gateways like Paytm, Razorpay, etc. and enabled these FinTech companies to launch large-scale online lending operations.
“Against RBI guidelines, Indian NBFCs have allowed FinTech companies to license themselves and make large-scale loans on their behalf,” the ED said.
Mobile apps from fintech companies have provided instant “unsecured” personal micro-loans for terms ranging from 7 to 14 days, he said.
“Previously, they deducted 15-25% of the loan at the time of disbursement itself in the name of processing fees.
“The interest rate charged was also sky-high. Their apps would also capture customers’ mobile data by obtaining various access privileges, etc.,” the ED said.
In order to get more profit, he added, they resorted to “hard-hit” measures through call centers.
The agency said “clients ‘personal data has been misused and calls have been made to clients’ friends and relatives and abusive language has been used.”
“Even messages on social networks have been posted against defaulters to shame them. Unable to bear the level of harassment, some people have committed suicide,” he said.
These apps have managed to have a recovery rate of over 90% and have generated huge profits, the ED said.
The accused NBFC – Kudos Finance and Investment Private Limited – is one such NBFC company that has entered into memorandums of understanding with 39 FinTech companies and illegally accepted “security deposits” from them and gave them license to engage in lending activities.
“Although it has no net held funds of more than Rs 10 crore, in total violation of RBI guidelines, this NBFC (in fact its partner mobile apps) has loaned Rs 2,224 crore in just a few minutes. time.
“With the help of extortionist type call centers, they collectively generated profits of Rs 544 crore for applications and also earned a commission of Rs 24 crore,” alleged the ED.
These amounts are nothing more than “illegal proceeds of crime” and can be seized by ED.
The agency arrested last December the promoter, director and CEO of this NBFC, Pavitra Pradip Walvekar.
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