April 23, 2024

Fraud Analysis

Enforcement Directorate attaches bank balance worth Rupees 105.32 crore for loan application fraud

Twelve non-banking financial companies, including Aglow Fintrade Private Ltd, Inditrade Fincorp Limited, and their affiliated companies, have been provisionally attached to the Enforcement Directorate (ED) for Rs.105.32 crore in different bank and payment gateway accounts. Currently, the proceeds of crime total 819 crores; the entire attachment is 264.3 crores.

The ED, which has been investigating several India-based NBFCs, revealed that the mentioned fintech companies wrongly stated to be offering customer-based services and technical support to NBFCs. However, the fintech companies were the original lenders controlling the lending process. According to ED officials, they brought funds through the developed digital loan apps. They also signed MoUs with inactive NBFCs and deposited the funds in these NBFCs as performance deposits.

The Fintech companies handled all the onboarding, loan recovery, and lending processes without any involvement from NBFCs. The NBFCs in turn, were paid a commission for allowing the fintech to use their license. The fintech companies, on the other hand, made a good profit by imposing high-interest rates and late fees for the loans they shelled out.

Based on orders from their Chinese owners, these fintech companies fixed the interest rates, platform fees, and processing fees. The debt collectors even harassed people to recover their loans, which led some debtors to commit suicide.

ED has identified two hundred and thirty-three bank accounts with balances over Rs.819 crore and has attached them under the Prevention of Money Laundering Act 2002.

A Provisional Attachment Order was issued earlier in the same case involving four non-banking financial companies and fintech partner companies for Rs.158.97 crore. Currently, the case has a total attachment of Rs.264.3 crore.

To keep up with the latest developments in the world of fintech and for more fintech news, please visit https://worldfintechnews.com/.

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