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ED attaches Rs 76.67 crore of Chinese companies in instant loan app fraud cases

The Enforcement Directorate (ED) said in a statement on Tuesday that it had issued a Provisional Attachment Order under the Prevention of Money Laundering Act, 2002 (PMLA) to seize Rs.76.67 crore from various bank accounts and payment gateways belonging to Chinese Loan App companies and their Indian associates.


The federal agency launched a probe based on several FIRs filed by Bengaluru's CID, which were based on complaints from clients who had taken out a loan and were harassed by the money lending organisations' recovery agents.



The money was attached by the ED to seven companies, three of which are Fintech companies controlled by Chinese nationals, namely Mad Elephant Network Technology Private Limited, Baryonyx Technology Private Limited, and Cloud Atlas Future Technology Private Limited, and three NBFCs registered with RBI, namely X10 Financial Services Private Limited, Track Fin-ed Private Limited, and Jamnadas Morarjee Finance Private Limited.


"Fintech firms have reached an arrangement with their respective NBFCs to disburse loans using digital lending applications. The sum attached by the ED also includes a fee of Rs.86.44 lakhs charged by Razorpay Software Private Limited for failing to do due diligence in the case of one firm enrolled with it for loan disbursement and collection ", according to the press release.


According to the government, its investigation indicated that these Chinese loan applications provided loans to individuals while charging usurious interest and administrative costs.


"The loan apps, through their recovery agents, resorted to systematic abuse, harassment, and threatening of defaulters through call centres for coercive loan recovery by obtaining sensitive data of the user stored on mobile, such as contacts, photographs, and using them to defame or blackmail the borrower," according to the agency.


It went on to say "They also threatened the borrowers by mailing forged legal notices to their relatives. Further investigation revealed that these Fintech companies have been conducting money lending business for which they are not licenced under any law, and that these NBFCs have knowingly allowed these Fintech companies to use their names in order to earn commission, without being concerned about the conduct of these Fintech companies in dealing with customers who are vulnerable members of society who are in desperate need of funds due to prevailing pandemics. This is also a breach of the RBI's Fair Practices Code. "


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