ED attaches ₹76.67 cr of 7 Chinese companies in instant loan app racket

Hyderabad: Almost a year after Bengaluru's Crime Investigation Department (CID) registered a case against instant loan app companies, the sleuths of the Enforcement Directorate have attached Rs. 76.67 crore lying in various bank accounts and payment gateways belonging to Chinese companies and their Indian associates.

In 2020 when scores lost their employment following the pandemic, some people fell prey to instant loan apps. Many who availed loans, however, faced harassment from the recovery agents of these money lending companies.

In addition to the case filed by Bengaluru police, Telangana's Central Crime Station had registered a number of cases and arrests followed.

What was their modus operandi?

The Chinese loan apps offered loans to individuals and levied exorbitant rates of interest and processing fees. Further, the app companies, through their recovery agents, abused, harassed, and threatened defaulters. Their call centers used coercive methods to recover the loans by obtaining sensitive data of the users from their mobile phones, including contacts and photographs, and used them to defame or blackmail the borrower.

According to complainants, the agents even threatened borrowers by sending fake legal notices to their relatives and family members. ED investigation revealed that fintech companies that ran the money lending business were not authorized by Indian law.

Whose money was attached?

The amount attached by ED pertains to seven companies out of which three are fintech companies - Mad Elephant Network Technology Private Limited, Baryonyx Technology Private Limited, and Cloud Atlas Future Technology Private Limited.

The three firms were under the control of Chinese nationals.

ED also seized money lying in non-banking financial companies (registered with RBI) namely X10 Financial Services Private Limited, Track Fin-ed Private Limited, and Jamnadas Morarjee Finance Private Limited.

Investigation also found that the companies had agreement with respective NBFCs for disbursement of loans through digital lending apps. The amount attached by ED also include amount of fee charged by Razorpay Software Private Limited to the extent of Rs. 86.44 lakhs for not conducting due diligence in case of companies enrolled with it for disbursement and collection of loans.