The ED official said that the agency was conducting money laundering investigations against a number of Indian NBFC companies and their fintech partner Mobile Applications (APPs).
Initially, Telangana Police lodged FIRs against them for illegal lending and for using extortionist means to recover exorbitant rates of interest from their customers, and the ED started its PMLA probe on the basis of the Telangana Police’s FIRs.
Its investigation revealed that various Indian companies which were flush with investments from China, and Hong Kong created MoUs with defunct NBFCs and gave security deposits in the name of ‘performance guarantees’.
The NBFCs opened separate Merchant IDs (MIDs) with Payment Gateways like Paytm, Razorpay, etc, and against RBI guidelines, allowed these fintech companies to piggyback on their license and do full-scale lending in their names.
Mobile APPs of the fintech companies were providing unsecured instant micro personal loans for terms ranging from 7 days to 14 days. They used to deduct 15-25 per cent of the loan at the time of disbursement itself in the name of processing fee. The rate of interest charged was also exorbitant. Their APPs would also capture customers’ mobile data by getting various access privileges etc. In order to obtain more profits, they resorted to harsh recovery measures via call centres.
Personal data of the customers was misused and calls were made to their friends and relatives of the customers and abusive language was used. Even social media posts were made against the defaulters to shame them. Unable to bear the level of harassment, certain people have committed suicide.
These APPs managed to have a recovery rate of more than 90 per cent and earned huge profits.
Kudos Finance and Investment Private Ltd was one such NBFC company that signed MOUs with 39 fintech companies, illegally accepted ‘security deposits’ from them and allowed them to do lending activity.
Despite not having net-owned funds of more than Rs 10 crore, in complete violation of RBI guidelines, this NBFC, or actually its partner Mobile APPs, did lending of Rs 2,224 crore in a short span of time.
With the help of “extortionist type” call centres, they collectively generated profits of Rs 544 crore for the APPs and also earned a commission of Rs 24 crore.
These amounts are nothing but illegal proceeds of crime and are liable for attachment by the ED, the agency said.
“ED has attached available bank balances in their accounts totalling Rs 72.32 crore. Earlier in this case, Pavitra Pradip Walvekar, Director-cum-CEO of Kudos was arrested on December 17 for the offence of money laundering and is in judicial custody,” said the ED official.
He said that further investigation in the matter is going on.