Instant loan case: ED files PC against NBFCs, fintech companies in Hyderabad; POC worth Rs. 434 Cr frozen

Hyderabad: Directorate of Enforcement (ED), Hyderabad Zonal Office has filed a Prosecution Complaint (PC) against several NBFCs, fintech companies, and individuals involved in instant loan lending business through various mobile applications.

The PC has been filed in the Special MSJ Court, Nampally, Hyderabad under the provisions of the Prevention of Money Laundering Act (PMLA).

ED initiated an investigation based on 43 FIRs registered in 2020-21 by the Cyber Crime Police Station, Cyberabad, and Rachakonda in Telangana State against various mobile applications and mobile numbers associated with various Fintech companies and NBFCs.

ED had earlier issued five Provisional Attachment Orders attaching properties of various Fintech companies and NBFCs worth Rs. 346.86 Crore. Further, Proceeds of Crime (POC) worth Rs. 434 Crore approx. in the form of bank account balances were put under freeze during search operations conducted in the case.

During the investigation, it was revealed that various Fintech companies used their funds and entered into agreements with defunct/dormant / non-performing NBFCs to indulge in short-term lending at exorbitant rates and by charging very high processing fees through mobile applications.

The mobile loan apps, while sanctioning loans, took access to private data of the borrowers such as images, messages, and contact details. This data was then misused to coerce the borrowers to repay the loans.

The borrowers were also offered loans at higher interest rates through other related loan apps to repay their existing loans which resulted in the borrowers falling into debt traps. Harassment and extortion compelled several borrowers to commit suicide.

The attachments and freezing orders have been confirmed by the Adjudicating Authority, PMLA.

Further investigation is under progress.