ED attaches assets worth over Rs 76 Cr of Chinese loan app vendors
New Delhi, May 11 (UNI) Enforcement Directorate (ED) on Tuesday said that it has issued a Provisional Attachment Order under the Prevention of Money Laundering Act, 2002 (PMLA), attaching Rs 76.67 Crore, lying in various bank accounts and payment gateways pertaining to Chinese Loan App companies and their Indian associates.
ED initiated investigation on the basis of various FIRs registered by CID branch at Bangaluru on the complaints received from various customers, who had availed loan and faced harassment from the recovery agent of these money lending companies.
The officials in the probe agency said that the amount attached by agency pertain to seven companies out of which three are Financial technical (Fintech) companies namely Mad Elephant Network Technology Private Limited, Baryonyx Technology Private Limited and Cloud Atlas Future Technology Private Limited, controlled by the Chinese nationals and three non-banking financial companies (NBFCs) registered with Reserve Bank of India (RBI) namely X10 Financial Services Private Limited, Track Fin-ed Private Limited and Jamnadas Morarjee Finance Private Limited.
The Fintech companies have agreement with respective NBFCs for disbursement of loans through digital lending apps.
The amount attached by ED also include amount of fee charged by Razorpay Software Private Limited to the extent of Rs 86.44 lakhs for not conducting due diligence in case of one company enrolled with it for disbursement and collection of loans.
Under the money laundering investigation, the central probe agency revealed that these Chinese loan apps offered loans to individuals and levied usurious rate of interest and processing fees.
“The loan apps through their recovery agents resorted to systematic abuse, harassment and threatening to the defaulters through the call centers for coercive recovery of the loans by obtaining sensitive data of the user stored on mobile such as contacts, photographs and using them to defame or blackmail to the borrower,” the officials in ED said, adding that they even threatened the borrowers by sending fake legal notices to their relatives and family members.
Further probe in this case also revealed that the money lending business has been indeed being run by these Fintech companies for which they are not authorized to do under any law.
These NBFCs knowingly let these companies to use their names for the sake of getting commission without being careful about the conduct of these Fintech companies in dealing with the customers from the vulnerable section of the society and who were in dire need of funds due to prevailing pandemic situation, the probe agency further said, adding that this was also violation of the Fair Practices Code of RBI.