ED attaches Rs 105.32 cr from 12 NBFC in case of loan application

Posted: Date Posted – 7:19 PM, Wed – 3 Aug 22

Hyderabad: The Enforcement Directorate (ED) has provisionally attached bank balances worth Rs.105.32 crore in various bank accounts and with payment gateway accounts of 12 Non-Banking Financial Institutions (NBFCs) – Inditrade Fincorp Limited, Aglow Fintrade Private Limited and others and their associated fintech businesses.

The ED initiated a money laundering investigation based on various First Information Reports (FIRs) registered by the Cyber ​​Crimes Police Station, Hyderabad under various sections of the Indian Penal Code (IPC) and of Article 67 of the Information Technology Act.

The ED has conducted money laundering investigations against a number of Indian NBFC companies that deal in instant personal micro loans. It is revealed that various fintech companies backed by Chinese funds have entered into agreements with these NBFC companies to provide instant personal loans with terms ranging from seven days to 30 days, according to a press release.

These fintech companies falsely claimed that they provided technical assistance and customer outreach services to NBFCs, but in reality, these fintech companies were the real lenders and controlled the entire lending process. i.e. fintech companies themselves developed their own digital lending app, they only brought the funds to lend to the public, entered into a memorandum of understanding with former NBFCs for their lending license .

They kept the funds in the NBFCs in the form of performance deposits/guarantees and these funds were in turn returned to the fintech companies again in separate MIDs (Merchant IDs) opened by the NBFC for enforcement. of the fintech company. Since fintech companies were unlikely to get a new NBFC license from the RBI, they devised the MOU route with old NBFCs as a medium to conduct large-scale lending activities .

It was expected that the NBFCs hired fintech companies for customer discovery, but in reality, the fintech companies relied on the license of the NBFCs and carried out large-scale lending activities. The fintech companies then did all the onboarding, lending, and loan collection work without any interference from the NBFCs.

Micro-loans were granted for a short period. Lending mobile apps have taken over customer social media data. Very high interest rates and high late fees were imposed. While fintech apps made the majority of the profit, NBFCs earned a commission for letting them use their license.

All decisions regarding interest rate setting, processing fees and platform fees etc. were made by fintech companies which operated based on the instructions of Chinese beneficial owners based in Hong Kong. Some people have committed suicide because of the bullying to recover.

The 12 NBFCs have entered into MoUs with various foreign-backed fintech companies to do online lending business in India. As seen from the activities carried out by the 12 NBFCs and the fintech companies associated with said companies, a total amount of Rs.4,430 crore has been disbursed. Across the business, NBFCs and fintech companies made a total profit of Rs 819 crore.

Therefore, the total amount of Rs.819 crore was deemed as proceeds of crime. The ED successfully identified the bank balances of 233 bank accounts and attaches them under the PMLA 2002 to safeguard the proceeds of crime. In addition, an investigation into the trail of funds is underway.

Earlier in this case, two Provisional Seizure Orders (PAO) were issued against four NBFCs and their fintech partners worth Rs.158.97 crore. The total attachment in this case is now Rs 264.3 crore, the press release added.

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