Hyderabad: The sleuths of the Enforcement Directorate, Hyderabad zone, seized Rs. 131.11 crore lying in the bank accounts of PC Financial Services Private Limited in connection to the alleged instant loan app case. Earlier, the officials had seized Rs. 106.93 crore.
ED is currently probing PC Financial Services (PCFS), a non-banking financial company, under the Foreign Exchange Management Act (FEMA) for suspicious foreign outward remittances. The firm is engaged in providing instant personal micro loans through its mobile application Cashbean.
Investigation revealed that PCFS has illegally remitted huge funds outside India in the guise of import of non-existent software and marketing services to park the funds abroad and hold them in the accounts of related foreign companies.
According to the company records, PCFS is a wholly-owned subsidiary (WOS) of Oplay Digital Services, SA de CV, Mexico, which is in turn a WOS of Tenspot Pesa Limited, Hong Kong. This company is owned by Opera Limited (Cayman Islands) and Wisdom Connection I Holding Inc (Cayman Islands), which are ultimately beneficially owned by Chinese national Zhou Yahui.
ED investigation found that foreign parent companies of PCFS brought foreign funding worth Rs. 173 crore for lending business. Within a short span of time, it made foreign outward remittances worth Rs. 429.29 crore in the name of payments for software services received from related foreign companies.
"PCFS also showed a high domestic expenditure of Rs. 941 crore. A detailed investigation into the foreign expenses paid by the NBFC revealed that most of the payments were made to foreign companies, which are related and owned by the same Chinese nationals who own the Opera Group. All foreign service providers were chosen by the Chinese," the ED said.
The probe revealed that country head Zhang Hong granted exorbitant payments to dummy Indian directors of PCFS. The Indian company then remitted forex worth Rs. 429 crore to 13 foreign companies located in Hong Kong, China, Taiwan, USA, and Singapore in the guise of payments for license fee for Cashbean mobile app.
The break-up of the money remitted (Rs. 245 crore per annum) showed Rs. 110 crore for software technical fee and around Rs. 66 core for online marketing and advertisement fee.
"Moreover, all the clientele of the NBFC was in India, despite that huge payments were made abroad and there was no proof of receipt of service. Simultaneously, during the same period, PCFS also booked domestic expenditure of a similar amount under the same heads of expenditure. PCFS management failed to give any justification for these expenses and admitted that all remittances were done to move money out of India and to park it abroad in the accounts of the companies controlled by the Chinese promoter," ED officials said.
In total, ED has seized Rs. 238 crore.