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What TV doesn't, print can't; we deliver.
NEW DELHI: The Enforcement Directorate (ED) on Wednesday said that it has attached bank balances worth ₹105.32 crores lying in various bank accounts and with payment gateway accounts of 12 Non-Banking Financial Companies (NBFCs) in connection with an instant personal micro-loans fraud case.
Among the companies are Inditrade Fincorp Limited, Aglow Fintrade Private Limited and others and their associated fintech companies.
The ED had registered a case of money laundering based on various FIRs registered under various sections of IPC and section 67 of the IT Act.
The agency said that it has been conducting a money laundering probe against several Indian NBFC companies which are in the business of Instant Personal Micro Loans.
It is revealed that various fintech companies backed by “Chinese funds” have entered into arrangements with these NBFC companies for providing instant personal loans of terms ranging from 7 days to 30 days.
The ED said that the said fintech companies falsely claimed that they were providing technical assistance or customer outreach services to the NBFCs, but in reality, these fintech companies were the actual lenders and controlled the entire lending process.
Fintech Companies themselves developed their digital loan APP, they only brought the funds to be lent to the public and did memorandum of understanding (MoU) with the defunct NBFCs for their lending license. They parked the said funds into the NBFCs in the guise of security deposits or performance guarantees. These funds were in turn again returned to the Fintech Companies in separate MIDs (Merchant ID) opened by the NBFC for the APP of the Fintech Company.
“Since the fintech companies were unlikely to get a fresh NBFC license from the RBI, they devised the MoU route with defunct NBFCs as a via media to do large-scale lending activities. It was projected that the NBFCs had hired Fintech Companies for Customer Discovery, but in reality, the Fintech Companies were piggybacking on the license of the NBFCs and doing large-scale lending business. The Fintech companies then did the entire onboarding, lending and loan recovery work without any interference from the NBFCs,” ED said.
Micro loans were given for a short period. Lending Mobile APPs took control of the social media data of the clients. Very high rates of interest and steep late fees were imposed. While the Fintech APPs made the majority of the profits, the NBFCs gained a commission for letting them use their license, the ED alleged.
It also alleged that entire decisions regarding fixation of interest rate/ processing fee or platform fee etc, were taken by fintech companies and these companies were operating based on instructions from Chinese, Hong Kong-based beneficial owners. Certain people have committed suicide due to harassment for recovery.
“Above mentioned 12 NBFCs are such NBFC companies which did MoUs with various foreign-backed fintech companies to do online lending business in India,” the ED said.
As seen from the business carried out by the said 12 NBFCs and fintech companies associated with the said companies, a total amount of ₹4,430 crores was disbursed. In the entire business, NBFCs and fintech companies have gained a total profit of ₹819 crores.
Therefore, the said total amount of ₹819 crores is considered to be proceeds of crime, the ED alleged.
It said that the agency has managed to identify Bank balances in 233 bank accounts and is attaching the same under PMLA to preserve the proceeds of crime. Further fund trail investigation is going on.
Earlier, in this case, two PAOs were issued against 4 NBFCs and their fintech partners for a value of ₹158.97 crores.
