ED ties Rs 76.67 crore from Chinese firms in instant loan app fraud cases

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The Enforcement Directorate (ED) has issued a Provisional Seizure Order under the Prevention of Money Laundering Act 2002 (PMLA) attaching Rs 76.67 crore, lying in various bank accounts and gateways owned by Chinese lending application companies and their Indian associates, the agency said in a statement on Tuesday.

The federal agency had initiated an investigation based on various FIRs registered by CID, Bengaluru based on the complaints received from various clients, who had been granted a loan and had been harassed by the debt collector of these companies. money loan.

The amount attached by ED concerns 7 companies of which three are Fintech companies, namely Mad Elephant Network Technology Private Limited, Baryonyx Technology Private Limited and Cloud Atlas Future Technology Private Limited, which are controlled by Chinese nationals and three NBFCs registered with RBI , namely X10. Financial Services Private Limited, Track Fin-ed Private Limited and Jamnadas Morarjee Finance Private Limited.

“The companies have entered into an agreement with the respective NBFCs for the disbursement of loans through digital lending apps. The amount attached by ED also includes the amount of fees charged by Razorpay Software Private Limited to the extent of Rs.86.44 lakhs for failing to exercise due diligence in the event a company registered with it for the disbursement and collection of loans,” the statement read.

The agency said its investigation revealed that these Chinese lending apps were offering loans to individuals and charging usurious interest rates and processing fees.

“Lending apps through their debt collectors have resorted to systematic abuse, harassment and threats of defaulters through call centers for coercive loan collection by obtaining sensitive user data stored on mobile such as contacts, photographs and using them to defame or blackmail the borrower,” the agency said.

He added “They even threatened the borrowers by sending fake legal notices to their relatives and family members. The investigation further revealed that the money lending business was indeed run by these Fintech companies to which they are not authorized to do so under any law and these NBFCs knowingly allow these fintech companies to use their name for the purpose of obtaining a commission without regard to the conduct of these fintech companies in their relationships with clients who are a vulnerable part of society and who are in urgent need of funds due to the current pandemic situation. . The same is also a violation of the RBI Code of Fair Practices”

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