fintech: Loan application case: Ed seizes 72 Cr from finance companies | Hyderabad News

Hyderabad: In the cases of loan applications, the Directorate of Enforcement (ED) has issued a provisional seizure order under the Prevention of Money Laundering Act (PMLA) tying 72 crore lying in various bank and payment gateway accounts of Kudos Finance and Investments Private Limited, an Indian non-bank financial company (NBFC) and its fintech partner companies.
ED has conducted a money laundering investigation against several Indian NBFCs and their fintech partner mobile apps, which have been booked by Telangana Police in several FIRs for illegal lending and using extortion means to recover interest rates exorbitant with customers.
ED’s investigation revealed that various Indian companies, which were teeming with investment from China and Hong Kong, had created a memorandum of understanding with late NBFCs and made security deposits in the name of “guarantees.” performance “. NBFCs have opened up separate merchant IDs with payment gateways like Paytm, Razorpay and have enabled these fintech companies to launch large-scale online lending operations.
“Contrary to RBI guidelines, Indian NBFCs have allowed FinTech companies to license themselves and lend on a large scale on their behalf. The mobile apps of the fintech companies provided instant unsecured personal micro-loans for terms ranging from seven days to 14 days. They deducted 15-25% of the loan at the time of disbursement itself in the name of processing fees. The interest rate charged was also exorbitant. Their apps would also capture customers’ mobile data. In order to get more profit, they resorted to severe recovery measures through call centers, ”said ED.
ED further said that customers’ personal data had been misused, calls were made to friends and relatives and abusive language was used. Even social media posts have been posted against the defaulters to shame them. These apps have managed to have a recovery rate of over 90% and have made huge profits.
Kudos Finance and Investment Private Limited, an NBFC, signed memoranda of understanding with 39 FinTech companies and illegally accepted “security deposits” from them and allowed them to engage in lending activities. With the help of extortionist call centers, they generated 544 crore profit for the apps and earned 24 crore commission.