The total attachment in this case now is Rs 264.3 crore.
The ED initiated money laundering investigation on the basis of various FIRs registered by Cyber Crime police station, Hyderabad under various sections of IPC and section 67 of IT Act, following suicides by various persons over alleged harassment for loan repayments.
The agency has been conducting money laundering investigations against a number of Indian NBFC companies which are in the business of instant personal micro loans.
It was learnt that various fintech companies, backed by Chinese funds, have entered into arrangements with these NBFC companies for providing instant personal loans of term ranging from 7 days to 30 days.
The fintech companies falsely claimed that they were providing technical customer outreach services to the NBFCs, but in reality, were the actual lenders and controlled the entire lending process, as per investigators.
These fintech companies themselves developed their own digital loan app, brought the funds to be lent to the public, signed MoU with the defunct NBFCs for their lending license and parked the said funds into the NBFCs in the guise of security deposits. These funds were, in turn, again returned to the fintech companies in separate MIDs (Merchant IsD) opened by the NBFC for the app of the fintech company, according to officials
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. As per officials, 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.
Micro loans were given for short time period with a very high rate of interest and steep late fee imposed, while lending Mobile apps took control of the social media data of the clients. While the fintech apps made the majority of the profits, the NBFCs gained commission for letting them use their license.
Entire decisions regarding fixation of interest rate, processing fee and platform fee were taken by fintech companies and these companies were operating on the basis of instructions from Chinese, and Hong Kong based beneficial owners.
The above mentioned 12 NBFCs were among those which did MoUs with various foreign backed fintech companies to do online lending business in India. As seen from the business carried out by the said 12 NBFCs and fintech companies associated with the said companies, a total amount of Rs 4,430 crore was disbursed. In the entire business, NBFCs and fintech companies have gained a total profit of Rs 819 crore, and this is considered to be proceeds of crime.
The ED has managed to identify balances in 233 bank accounts and is attaching the same under PMLA to preserve the proceeds of crime.
Earlier in this case, two PAO’s were issued against 4 NBFCs and their fintech partners for a value of Rs 158.97 crore.
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