The Enforcement Directorate (ED) has provisionally attached Rs 86.65 crore lying in various bank accounts and payment gateway accounts of Chinese fintech companies relating to NBFCs like Kudos Finance and Investments Private Ltd., Acemoney (India) Ltd., Rhino Finance Pvt. Ltd. and Pioneer Financial and Management Services Pvt. Ltd. under the Prevention of Money Laundering Act (PMLA).
The ED has been conducting money laundering investigations against a number of non-banking financial companies (NBFCs) which are in the business of Instant Personal Micro Loans.
“It is revealed that, various fintech companies backed by Chinese funds have made agreements with these NBFC companies for providing instant personal loans of term ranging from 7 days to 30 days. Fintech Companies brought the funds to be lent to the public, did MoU with the defunct NBFCs for their lending license,” the ED said in a statement
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, it said.
Entire decisions regarding fixation of interest rate/ processing fee/ platform fee were taken by fintech companies and these companies were operating on the basis of instructions from Chinese and Hong Kong-based persons. “NBFC companies namely Kudos, Acemoney, Rhino and Pioneer entered into MoUs with foreign backed fintech companies to carry out online lending business in India.
An amount of Rs 940,46,39,498 has been considered to be proceeds of crime as the same was gained by way of predatory lending activities in violation of RBI guidelines,” the agency said.
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. Further fund trail investigation is going on, it said.
Earlier in this case, a provisional attachment order was issued against NBFC Kudos Finance and Investments Private Limited and its fintech partners for a value of Rs 72.32 crore. The total attachment in this case till date is INR 158.97 crore.