ED ties ₹ 76.67 cr of 7 Chinese companies in instant loan application racketeering

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Hyderabad: Almost a year after Bengaluru’s Crime Investigation Department (CID) registered a complaint against instant loan application companies, law enforcement department detectives tied Rs. 76, 67 crore found in various bank accounts and payment gateways owned by Chinese companies and their Indian associates.

In 2020, when scores lost their jobs as a result of the pandemic, some people fell prey to instant loan applications. Many of those who have resorted to loans, however, have been harassed by the collectors of these money lending companies.

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

What was their modus operandi?

Chinese loan apps offered personal loans and charged exorbitant interest rates and processing fees. Additionally, app companies, through their recovery agents, abused, harassed, and threatened defaulters. Their call centers used coercive methods to recover loans by obtaining sensitive user data from their cell phones, including contacts and photographs, and used them to defame or blackmail the borrower.

According to the plaintiffs, agents even threatened borrowers by sending false legal notices to relatives and family members. ED’s investigation found that the fintech companies that ran the money-lending business were not permitted by Indian law.

Who was the money attached to?

The amount tied by ED is for seven companies, three of which are financial technology companies – Mad Elephant Network Technology Private Limited, Baryonyx Technology Private Limited and Cloud Atlas Future Technology Private Limited.

All three companies were controlled by Chinese nationals.

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

The survey also found that the companies had entered into an agreement with the respective NBFCs for the disbursement of loans through digital loan applications. The amount attached by ED also includes the amount of fees charged by Razorpay Software Private Limited to the extent of Rs. 86.44 lakhs for failing to exercise due diligence in the case of companies registered with it for the loan disbursement and recovery.

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