ED provisionally attached properties worth Rs19.39 Crore in the form of bank balances and fixed deposits belonging to various entities connected with Instant Loan Apps cases; ED initiated investigation on the basis of 43 FIRs registered by the Cyber Crime Police Station, Cyberabad and Rachakonda in Telangana against various mobile applications and mobile numbers associated with various Fintech companies and NBFCs
FinTech BizNews Service
Mumbai, August 24, 2024: Directorate of Enforcement (ED), Hyderabad Zonal Office has filed Prosecution Complaint (PC) against several NBFCs, Fintech companies and individuals involved in instant loan lending business through various mobile applications before the Hon'ble Special MSJ Court, Nampally, Hyderabad under the provisions of Prevention of Money Laundering Act (PMLA), 2002 and the Hon'ble Court has taken cognizance of the PC on 22.08.2024, as per the press release issued by the ED.
ED initiated investigation on the basis of 43 FIRs registered in 2020-21 by the Cyber Crime Police Station, Cyberabad and Rachakonda in Telangana State against various mobile applications and mobile numbers associated with various Fintech companies and NBFCs.
Directorate of Enforcement (ED), Hyderabad has provisionally attached properties worth Rs19.39 Crore in the form of bank balances and fixed deposits belonging to various entities connected with Instant Loan Apps cases under the provisions of Prevention of Money Laundering Act (PMLA), 2002. ED initiated investigation on the basis of 118 FIRs registered by Telangana Police under the provisions of IPC, 1860 and Information Technology Act, 2000 against as many as 242 instant loan mobile applications. Fintech companies were running numerous loan apps and were charging very high processing fees, exorbitant interest rates and penal charges from the borrowers. The loan apps were being used for running non-banking finance business without valid licenses from RBI/Government authorities or by using the licences of defunct/dormant/non-functional NBFCs. While sanctioning the loans, all contact details, photos and personal data of the customers/borrowers were being taken through the loan apps. This data was then misused through tele-caller companies to recover outstanding loan amounts by abusing the borrowers as well as their family members and also by sending objectionable images of the borrowers to their contacts with derogatory remarks. The borrowers were also suggested to repay their existing loans by taking loans from other related loan applications resulting in the borrowers falling in debt traps. ED investigation revealed that certain mobile apps such as ‘Online Loan’, ‘Rupiya Bus’, ‘Flip Cash’, ‘Rupee Smart’, etc. were linked to M/s Nimisha Finance India Private Limited [an NBFC] and M/s Skyline Innovation Technology (India) Private Limited (fintech company having Chinese directors) and proceeds of crime were generated by lending business through these mobile apps. Further, M/s Skyline entered into an MOU with Rajkot Investment Trust Limited (RITL), an NBFC, for doing similar activity and in this process transferred proceeds of crime totalling Rs. 20 Crore to RITL. However, on account of arrest of Directors of M/s Skyline by the Police and initiation of criminal proceedings, the said amount of Rs. 20 Crore, which was Proceeds of Crime (POC) generated by M/s Skyline, was not used by M/s RITL for lending business or returned back to M/s Skyline. Instead, M/s RITL retained the said POC and thereafter with an intent to conceal & layer the same, transferred the POC to the accounts of various related persons & entities controlled by them. A part of the proceeds of crime was also withdrawn in cash to obfuscate the trail of funds. The money trail done during PMLA investigation led to the attachment of these POC totalling Rs. 19.39 Crore in the bank accounts / fixed deposits of M/s Nimisha Finance India Private Limited, M/s Rajkot Investments Trust Limited, M/s Mahananda Investment Limited and M/s Baskin Management Consultancy Private Limited and others. Further investigation is under progress.
ED investigation revealed that various Fintech companies used their funds and entered into agreements with defunct / dormant / non-performing NBFCs to indulge in short term lending at exorbitant rates and by charging very high processing fees through mobile applications. The mobile loan apps, while sanctioning loan, took access of private data of the borrowers such as images, messages and contact details. This data was then misused to coerce the borrowers to repay the loans. The borrowers were also offered loans at higher interest rates through other related loan apps so repay their existing loans which resulted in the borrowers falling in debt traps. Harassment and extortion compelled several borrowers to commit suicide. ED had earlier issued five Provisional Attachment Orders attaching properties of various Fintech companies and NBFCs worth Rs. 346.86 Crore. Further, Proceeds of Crime (POC) worth Rs. 434 Crore approx. in the form of bank account balances were put under freeze during search operations conducted in the case. These attachments and freezing orders have been confirmed by the Adjudicating Authority, PMLA. Further investigation is under progress.
