ED attaches bank balances worth Rs. 105.32 cr from 12 companies in loan app scam
Hyderabad: The Enforcement Directorate (ED) has provisionally attached the bank accounts, worth Rs. 105.32 crores, of 12 NBFCs including Inditrade Fincorp Limited, Aglow Fintrade Private Limited and others and their fintech companies associated.
ED initiated a money laundering investigation based on various FIRs registered by the Hyderabad Cybercrime Police under various sections of IPC and IT Act.
ED has conducted money laundering investigations against a number of Indian NBFC companies that offer 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 for terms ranging from 7 to 30 days.
How fintech companies used old NBFCs
Fintech companies falsely claimed that they provided technical support/customer outreach services to NBFCs, but in reality, these fintech companies were the real lenders and controlled the entire lending process. Fintech companies have developed their own digital lending app, brought the funds to the public for lending, signed memorandums of understanding with outdated NBFCs for their lending license, and placed said funds in NBFCs under the guise of security deposits and performance guarantees. These funds were in turn returned to the fintech companies in separate MIDs (Merchant Identifiers) opened by the NBFC for the application of the fintech company.
Since fintech companies were unlikely to get a new NBFC license from the RBI, they designed the MoU route with old NBFCs for large-scale lending business. It was expected that the NBFCs had 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 have done all of the onboarding, lending and loan collection work without any interference from the NBFCs. Micro-loans were granted for short periods. 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, platform fees, etc. were taken by fintech companies and these companies operated on the basis of instructions from Chinese and Hong Kong-based beneficial owners. Some people have died by suicide due to harassment for loan collection.
The 12 NBFCs and fintech companies associated with them had disbursed a total amount of Rs. 4,430 crores. They made a total profit of Rs. 819 crores which is considered as proceeds of crime. ED has successfully identified bank balances in 233 bank accounts and attaches them under the PMLA 2002. Further investigation of the money trails is ongoing.
Previously, two PAOs were issued against four NBFCs and their fintech partners worth Rs. 158.97 crores. The total attachment in this case now stands at Rs. 264.3 crores.