HYDERABAD: The Enforcement Directorate (ED) has provisionally seized assets worth Rs 86.65 crore in connection with the Chinese loan enforcement cases. The attached deposits are in 155 bank accounts and payment gateway accounts belonging to Indian NBFCs Kudos Finance and Investments Private Limited, Acemoney (India) Limited, Rhino Finance Private Limited and Pioneer Financial and Management Services Private Limited and several fintech companies associated with them. These companies are said to be operated by Chinese nationals and have earned over Rs 940 crore by lending through these online lending apps.
The ED had earlier tentatively attached deposits worth Rs 72.32 crore belonging to Kudos Finance and Investments Private Limited and its fintech partners. So far, the total attachments in this case have reached Rs 158.97 crore, the ED said. The Enforcement Branch has carried out investigations against a number of NBFC companies active in the field of instant personal microloans. It is revealed that these fintech companies backed by Chinese funds have entered into agreements with these NBFC companies to provide instant personal loans with terms ranging from seven to 30 days.
Fintech companies brought in the funds to lend to people, entered into a memorandum of understanding with former NBFCs. Since fintech companies were unlikely to get a new NBFC license from the RBI, they devised the MoU route with old NBFCs to continue the lending business at scale.
It was intended that the NBFCs hired the fintech companies for customer discovery, but in reality, the fintech companies relied on the license of the NBFCs for their lending activities. All decisions regarding interest rate setting, processing fees and platform fees were made by fintech companies and these companies operated on the basis of instructions from Chinese and Hong Kong nationals.
MoUs with overseas-based fintech companies
The ED found that NBFCs like Kudos Finance, Acemoney, Rhino Finance Pvt Ltd, Pioneer Financial Services Pvt Ltd have entered into MoUs with foreign-backed fintech companies to conduct large-scale online lending business in India.