ED Seizes Rs 19.39 Crore in Instant Loan Apps Case in New Delhi
The Enforcement Directorate (ED) in New Delhi has taken action against properties worth Rs 19.39 crore connected to instant loan apps. These properties include bank balances and fixed deposits.
Background
The ED’s Hyderabad branch attached these properties under the Prevention of Money Laundering Act (PMLA), 2002. This action is based on 118 First Information Reports (FIRs) registered by Telangana Police under the Indian Penal Code (IPC), 1860, and the Information Technology Act, 2000. These FIRs were against 242 instant loan mobile applications.
Loan Apps Misconduct
Fintech companies were running numerous loan apps, charging high processing fees, exorbitant interest rates, and penal charges. These apps operated without valid licenses from the Reserve Bank of India and other authorities, or used licenses of non-functional Non-Banking Financial Corporations (NBFCs).
While sanctioning loans, these apps collected contact details, photos, and personal data of borrowers. This data was misused by tele-caller companies to recover outstanding loans by abusing borrowers and their families, and sending objectionable images with derogatory remarks.
Debt Traps
Borrowers were often advised to repay existing loans by taking new loans from related apps, leading to debt traps.
Key Companies Involved
Mobile apps like ‘Online Loan’, ‘Rupiya Bus’, ‘Flip Cash’, and ‘Rupee Smart’ were linked to Nimisha Finance India Private Limited and Skyline Innovation Technology (India) Private Limited. Skyline, with Chinese directors, transferred Rs 20 crore to Rajkot Investment Trust Limited (RITL) for similar activities.
Money Laundering
After the arrest of Skyline’s directors, RITL retained the Rs 20 crore and transferred it to various related persons and entities to conceal the funds. A part of the money was withdrawn in cash to hide the trail.
ED’s Action
The ED’s investigation led to the attachment of Rs 19.39 crore in bank accounts and fixed deposits of Nimisha Finance, Rajkot Investments Trust, Mahananda Investment Limited, and Baskin Management Consultancy Private Limited.
Doubts Revealed
ED -: ED stands for Enforcement Directorate. It is a government agency in India that investigates financial crimes like money laundering and fraud.
Rs 19.39 Crore -: Rs 19.39 Crore means 19.39 crore rupees. A crore is a unit in the Indian numbering system equal to ten million (10,000,000). So, 19.39 crore is 193,900,000 rupees.
Instant Loan Apps -: Instant loan apps are mobile applications that allow people to borrow money quickly, often with high fees and interest rates.
Fintech -: Fintech stands for financial technology. It refers to companies that use technology to offer financial services, like loans or payments, through apps or websites.
FIR -: FIR stands for First Information Report. It is a document prepared by the police in India when they receive information about a crime.
Telangana Police -: Telangana Police is the law enforcement agency for the state of Telangana in India. They handle crime and maintain law and order in the state.
Nimisha Finance -: Nimisha Finance is one of the companies involved in the instant loan apps case. They were offering loans through their app.
Skyline Innovation Technology -: Skyline Innovation Technology is another company involved in the case. They also offered loans through their app and were part of the investigation.
Rajkot Investment Trust Limited -: Rajkot Investment Trust Limited is a company that received money from Skyline Innovation Technology. The money was later hidden or concealed.
Attachment of funds -: Attachment of funds means that the government has taken control of the money involved in the crime to prevent it from being used or moved.
