ED attaches Rs 77.36 Cr in cash to Kudos Finance

Hyderabad: In the ongoing investigation against the instant loan application case, the Enforcement Branch has tied up money worth Rs 72.36 crore in various bank accounts and payment gateways of Kudos Finance and Investments private limited, an Indian non-bank finance company, and its various fintech partner companies.

The investigative agency opened the investigation on the basis of several FIRs registered by the Telangana police.

What is the crime?

After the second wave of COVID, the Cyberabad police station received several complaints against various instant loan apps available on Playstore. This incidentally, one city has seen a number of cases of suicide. A study of the case revealed that a number of loan applications used extortion to recover exorbitant interest rates from their borrowers.

After lending the money in the blink of an eye, the accused companies dishonored the borrower and blackmailed the person into extracting money from him. Several WhatsApp groups have been created to defame the borrower. Due to the harassment, some young technicians ended their lives.

Multiple complaints reflected a stronger connection. Based on FIRs registered by Telangana Police, ED initiated an investment only to find out that various Indian companies that were teeming with investment from China / Hong Kong that created MoUs with defunct NBFCs and have given security deposits in the name of “performance guarantees”.

Also, these NBFCs have opened separate Merchant Identifiers (MIDs) with payment gateways like Paytm, Razorpay, etc. The investigation found that Indian NBFCs allow FinTech companies to license themselves and make large-scale loans on their behalf.

Operating mode:

The mobile apps of the fintech companies provided instant unsecured personal micro-loans for terms ranging from 7 days to 14 days. They deducted 15-25% of the loan at the time of disbursement itself in the name of processing fees. The interest rate charged was also exorbitant.

Meanwhile, their apps would also capture customers’ mobile data by getting various access privileges etc. In order to get more profit, they resorted to severe recovery measures through call centers. Personal data of clients has been misused and calls have been made to friends and relatives of clients and abusive language has been used.

Even social media posts have been posted against the defaulters to shame them. Unable to cope with the level of harassment, some people committed suicide.

These apps have managed to have a recovery rate of over 90% and have generated huge profits. M / s Kudos Finance and Investment Private Limited is one such NBFC company that entered into memoranda of understanding with 39 FinTech companies and illegally accepted “security deposits” from them and allowed them to ” carry out the loan activity.

Violation:

Although it has no net held funds of more than Rs. 10 Crore, in total violation of RBI guidelines, this NBFC (actually its partner Mobile APPs) loaned Rs 2224 Crore in a short period of time. . With the help of extortionist type call centers, they collectively generated profits of Rs 544 Crore for applications and also earned a commission of Rs 24 Crore. These amounts are only illegal proceeds of crime and can be seized by ED.

ED has attached available bank balances on their accounts totaling Rs 72.32 Crore. Previously, in this case, Mr. Pavitra Pradip Walvekar, director and CEO of Kudos was arrested on December 17, 2021 for the offense of money laundering and is in police custody.

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