fintech: China-backed fintech firms resorted to predatory lending, pocketed Rs 940 crore: ED

The Directorate of Enforcement (ED) said on Wednesday that various fintech companies and non-banks backed by Chinese funds indulged in predatory lending, violating Reserve Bank of India (RBI) guidelines and generating proceeds of crime worth more than Rs 940 crore.

The federal agency said decisions on fixing interest rate / processing fee / platform fee etc., were taken by fintech companies and these companies were taken by fintech companies and these companies were operating based on instructions from people in China and Hong Kong.

The agency recently provisionally attached Rs86.65 crore lying in various bank accounts pertaining to non-banking financial companies under the Prevention of Money Laundering Act (PMLA) 2002.

The non-banks included M / s Kudos Finance and Investments Pvt Lts, M / s Acemoney (India) Ltd, M / s Pioneer Financial and Management Services Pvt. Ltd. These are Indian NBFCs and multiple fintech companies associated with them.

The agency is conducting a money-laundering probe against a number of NBFCs that are in the business of instant personal micro loans. The agency said its probe had revealed that various fintech companies backed by Chinese funds have made agreements with these NBFCs to provide loans for terms ranging from seven to 30 days.

Fintech companies brought the funds to be lent to the public and entered into memoranda of understanding (MoU) with the defunct NBFCs for their lending license.

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Since fintech companies were unlikely to get fresh NBFC license from the RBI, they devised the MoU route with defunct NBFCs to indulge in large-scale lending activities, the agency said in a statement.

It was projected that the NBFCs had hired fintech companies for customer discovery, but the fintech companies were piggybacking on the license of the NBFCs and conducting large-scale lending businesses, ED said.

The agency said that NBFCs namely Kudos, Acemoney, Rhino and Pioneer entered into MoUs with foreign-backed fintech companies to carry out online lending business in India.

The ED has identified bank balances of Rs 86.65 crore in 155 bank accounts and the same have been attached under the provisions of PMLA to preserve the proceeds of crime.

Earlier in this case, a provisional attachment order was issued against Kudos Finance and its fintech partners for Rs 72.32 crore. The total attachment in this case till date is Rs 158.97 crore.

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