ED initiated investigation on the basis of various FIRs registered by CID

Enforcement Directorate (ED) 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, Bengaluru based on the complaints received from various customers, who had availed loan and faced harassment from the recovery agent of these money lending companies. The amount attached by ED pertain to 7 companies out of which three are Fintech companies namely Mad Elephant Network Technology Private Limited, Baryonyx Technology Private Limited and Cloud Atlas Future Technology Private Limited which are controlled by the Chinese nationals and three NBFCs registered with 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.

Money laundering investigation by ED 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. They even threatened the borrowers by sending fake legal notices to their relatives and family members. Investigation further 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 and these NBFCs knowingly let these fintech 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 who are vulnerable section of the society and are in dire need of funds due to prevailing pandemic situation. The same is also violation of the Fair Practices Code of RBI.
Further investigation is in progress.

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