Hyderabad: ED seizes assets worth Rs 252.36 crores linked to Chinese-owned PC Financial Services
A penalty totalling Rs 21,46,48,26,480 was also imposed
By Newsmeter Network Published on 10 Oct 2024 1:24 PM GMT
Hyderabad: The Directorate of Enforcement (ED) here have seized properties worth Rs 252.36 crores linked to PC Financial Services (PCFS), under the provisions of the Foreign Exchange Management Act (FEMA), 1999.
Money lending app - CashBean
PCFS is a subsidiary of the Opera Group, Norway. FEMA investigation revealed that PCFS, the overall control of which was held by Chinese beneficial owners, were lending money to the public in India through its mobile app known as āCashBeanā.
Business transactions worth Rs 429.30 crores (approx.) were made by PCFS to its related overseas group companies in the garb of āImport of Software Licenses and Servicesā which were found to be bogus.
Investigation resulted in the seizure of various properties of PCFS held in India, aggregating to Rs 252.36 crores, in terms of Section 37A of FEMA vide three seizure orders passed during 2021. A penalty totalling Rs 21,46,48,26,480 was also imposed.
PC Financial Services case details
The said seizure orders were confirmed by the competent authority vide order dated February 4, 2022, against which PCFS has filed an appeal before the appellate forum which is pending a decision.
As per a press release on February 25, 2022, RBI said that PCFS was found to be charging an extortionate rate of interest and other charges to its borrowers in an opaque manner. It also found that the company was indulging in the unauthorised use of logos of the Reserve Bank of India and Central Bureau of Investigation (CBI) for recovery from the borrowers, in gross violation of the Fair Practices Code. The Certificate of Registration of PCFS was cancelled and it was debarred from acting as a Non-Banking Financial Institution.
Request to confiscate properties
On June 21, 2022, a complaint was filed by the ED against PCFS and others, under Section 16 of FEMA, charging them for violations of various provisions of FEMA. The complaint included a request to confiscate the properties of PCFS seized.
Having taken the complaint into consideration, a show cause notice dated June 22, 2022, was issued. However, it was said that one of the persons mentioned in the notices, Zhang Hong, the then country head of PCFS during the contravention period, neither replied to the notice nor availed the opportunity of a personal hearing.
Upon careful investigation, it has been found that the alleged FEMA violations have been clearly proven. Accordingly, on October 7, 2024, properties worth Rs 252.36 crores (approx.) of PCFS held in India were seized.
