HYDERABAD: The Enforcement Directorate (ED) has provisionally tied over Rs 72.32 Crore deposits lying in various bank accounts and payment gateway accounts of M/s Kudos Finance and Investments Private Limited, a non-bank financial company India (NBFC), and its various financial technology (Fintech) partner companies, in the context of Chinese business on instant loan applications.
Kudos Finance and Investment Private signed MoUs with 39 Fintech companies and illegally accepted “security deposits” from them and allowed them to do the lending business. Despite having no net funds held of more than Rs 10 Crore and in complete violation of RBI guidelines, Kudos Finance lent Rs 2,224 Crore within a short period of time.
They also collectively generated profits of Rs 544 Crore for the APPs and also earned a commission of Rs 24 Crore.
ED has attached free bank balances in their accounts totaling Rs 72.32 Crore. Earlier in this case, Pavitra Pradip Walvekar, Director and CEO of Kudos was arrested in December 2021 for money laundering and is currently in judicial custody.
ED has initiated a money laundering investigation against several Indian NBFCs and their fintech partner mobile applications (APPs) based on several FIRs registered against them at various police units in Telangana for illegal lending and for using means of extortion to recover exorbitant interest rates from their clients.
So far, the investigation has revealed that various Indian companies which were teeming with investment from China and Hong Kong created MoUs with former Indian NBFCs and gave security deposits on behalf of “ performance guarantees. NBFCs have opened separate Merchant IDs (MIDs) with payment gateways such as Paytm, Razorpay, etc. and enabled these fintech companies to start large-scale online lending operations.
These NBFCs allowed fintech companies to piggyback on their license and make large-scale loans in their name, against RBI guidelines. In addition, mobile apps from fintech companies have started providing instant unsecured personal micro loans for terms ranging from 7 days to 14 days by deducting 15-25% of the loan at the time of disbursement itself in the name of fees. treatment.
The interest rate charged was also exorbitant, up to 50% in some cases. Their apps would also capture customers’ mobile data by gaining various access privileges. And, in order to reap quick and greater benefits, these agencies resorted to harsh recovery measures via call centers, to which customers’ personal data was shared.
Calls were made to customers’ friends and family and abusive language was used for loan repayments. Even social media posts were also made against defaulters to shame them. These APPs managed to have a recovery rate of over 90% and made huge profits. Unable to bear the level of harassment, in Telangana alone at least seven people have died by suicide. Further investigation is underway.