In the Chinese Loan App case, the Enforcement Directorate (ED) filed a chargesheet with the Special Prevention of Money Laundering Act Court in Bengaluru against 7 companies including Razorpay and 5 individuals.
The findings of the investigation conducted by the ED revealed that the Fintech firms and the relevant NBFCs have agreements for the disbursement of loans via online lending apps.
One payment gateway, Razorpay Software Private Limited, three Non Banking Financial Companies registered with the Reserve Bank of India(RBI) X10 Financial Services Private Limited, Track Fin-ed Private Limited, and Jamnadas Morarjee Finance Private Limited as well as three Fintech firms Mad Elephant Network Technology Private Limited, Baryonyx Technology Private Limited, and Cloud Atlas Future Technology Private Limited that are controlled by Chinese nationals are among the accused entities.
In this instance, the ED previously obtained two provisional attachment orders and attached Rs. 77.25 crore, which was found to be in the bank accounts and payment gateways.
Based on complaints received from a wide range of customers who had applied for loans and experienced harassment from the recovery agent of these money lending organisations, ED had opened an investigation based on the numerous FIRs recorded by CID, Bengaluru.
Investigations found that these fintech firms are actually operating their money lending operations unlawfully, and these NBFCs intentionally allowed these fintech companies to use their names in order to receive commissions without being watchful of these fintech companies’ behaviour. The same is also a violation of the Fair Practices Code of RBI. The investigation is going on.
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