Mumbai: The Enforcement Directorate (ED) has filed a chargesheet against 12 entities and individuals, including three Reserve Bank of India (RBI)-registered Non-Banking Financial Companies (NBFCs) and three Chinese-controlled fintech firms as part of its money-laundering probe into alleged operation of illegal Chinese loan apps. The NBFCs were accused of letting the loan apps' owners, the three Chinese-controlled firms, run money-lending business by using their names in lieu of commission.
The NBFCs were also accused of not being vigilant about the loan app firms' conduct that was allegedly in violation of the RBI's Fair Practices Code, an ED official said. The loan app firms had allegedly concluded contracts with the NBFCs for disbursement of loans through their digital lending apps, the official said. The agency also chargesheeted a payment gateway for their alleged involvement in the case. The chargesheet, against seven entities and five individuals in all, was submitted in a Bengaluru special court. An NBFC, as per section 451(c) of the RBI Act, is a non-banking company that carries the business of a financial institution and is involved in the lending business, hire-purchase, leasing, among others.
ED begun investigation based on customer complaints of loan apps
The ED had begun its investigation based on the multiple FIRs registered by the Criminal Investigation Department, Bengaluru, based on complaints received from various aggrieved customers of the loan apps. The customers who availed loans allegedly faced harassment from the recovery agents of these money-lending companies.
"The ED has filed a prosecution complaint against 7 entities and 5 individuals involved in the Chinese Loan App case before the Special PMLA Court, Bengaluru. The court has taken cognisance of the complaint," an ED official said.
"The accused entities include three fintech companies, Mad Elephant Network Technology Private Limited, Baryonyx Technology Private Limited and Cloud Atlas Future Technology Private Limited, which are controlled by Chinese nationals. Complaints have also been filed against three NBFCs registered with RBI, X10 Financial Services Private Limited, Track Fin-ed Private Limited and Jamnadas Morarjee Finance Private Limited and one payment gateway, Razorpay Software Private Limited," the ED official said.
Money lending business run illegally by fintech companies: ED official
"Investigation conducted by ED revealed that the fintech companies have agreement with respective NBFCs for disbursement of loans through digital lending apps. During the investigation, it was revealed that the money lending business is being illegally run by these fintech companies, " the ED official said.
" 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. The same is also violation of the Fair Practices Code of RBI, " the ED official said.
The agency had earlier also issued two provisional attachment orders related to assets to the tune of Rs 77.25 crore lying in bank accounts and payment gateways, which were alleged to be the case's proceeds of crime. The attachments were confirmed, according to the ED.
