Hyderabad: In the ongoing Investigation against the Instant loan application case, the Enforcement Directorate has attached money worth Rs 72.36 crore lying in various bank accounts and payment gateways of Kudos Finance and Investments private limited, an Indian Non-Banking Financial company, and its various fintech partner companies.

The investigation agency took up the probe based on multiple FIRs registered by the Telangana Police.

What is the crime?

Post-COVID second wave, the Cyberabad Commissionerate received multiple complaints against various Instant Loan applications available on Playstore. This besides, a city saw a number of suicide cases. A delve into the matter revealed that a number of money lending applications were using extortionist means to recover exorbitant rates of interest from their borrowers.

After lending money in a jiffy, the accused companies would name shame the borrower and blackmail the person to extract money. Several WhatsApp groups were created to defame the borrower. Owing to the harassment, a few young techniques ended their lives.

Multiple complaints reflected a bigger nexus. Based on the FIRs registered by Telangana Police, ED initiated investment only to find that various Indian companies which were flush with investments from China/Hong Kong who created MoUs with defunct NBFCs and gave security deposits in the name of 'performance guarantees'.

Further, these NBFCs opened separate Merchant IDs (MIDs) with Payment Gateways like Paytm, Razorpay, etc, and allowed these fintech companies to start full-scale online lending operations, against the RBI guidelines. The probe found that Indian NBFCs allowed fintech companies to piggyback on their license and do full-scale lending in their names.

Modus Operandi:

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% of the loan at the time of disbursement itself in the name of the processing fee. The rate of interest charged was also exorbitant.

Meanwhile, 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 centers. Personal data of the customers was misused and calls were made to the 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% and earned huge profits. M/s Kudos Finance and Investment Private Limited is one of such NBFC company which did MOUs with 39 Fintech Companies and illegally accepted 'security deposits' from them and allowed them to do the lending activity.

Violation:

Despite not having Net Owned Funds of more than Rs. 10 Crore, in complete violation of RBI guidelines, this NBFC (actually its partner Mobile APPs) did lending of Rs 2224 Crore in a short span of time. With the help of extortionist type call centers, collectively they 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 ED.

ED has attached available bank balances in their accounts totaling Rs 72.32 Crore. Earlier, in this case, Mr. Pavitra Pradip Walvekar, Director cum CEO of Kudos was arrested on 17th December 2021 for the offense of money laundering and is in judicial custody.

Coreena Suares

Coreena Enet Suares is the Editor of NewsMeter. Her stories have been published in the Deccan Chronicle Newspaper and the Asian Age. Coreena began her career as a News Anchor. Throughout her journey, she has been able to build a strong network with people from all walks of life. She is an alumnus of Edward R. Murrow Program for Journalists- Research and Investigation, a flagship initiative of the International Visitor Leadership Program (IVLP) Coreena is also a certified fact-checker by Google India Initiative. She has attended the 'Defence Correspondents Course 2019, through which she visited Indo- Pak border, besides traveling on a War-ship and insight into operations of Fighter aircraft. Coreena's focus areas are anti-crime investigation agencies and Defence reporting. You can follow Coreena on [email protected]

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