The agency’s Hyderabad office is probing 38 non-banking financial companies (NBFCs) and over 300 fintech firms under the anti-money laundering law
The Enforcement Directorate (ED) on Tuesday summoned senior executives of Google and sought a detailed list of micro-lending apps operational in the country, as part of its ongoing investigation into instant app-based loan frauds.
“Executives at Google, Hyderabad, were called today to provide a list of all such mobile apps in order to verify them through the Google Play Store,” said a person in the know.
The agency’s Hyderabad office is probing 38 non-banking financial companies (NBFCs) and over 300 fintech firms under the anti-money laundering law for providing instant micro-financing using mobile apps and seeking high interests from defaulters.
The agency suspects that thousands of crores have been remitted outside India through these apps.
“Even if you shift from one app to another, Play Store should be able to tell the total number of apps in the sector (lending business),” an official told Business Standard.
An email sent to a Google spokesperson remains unanswered.
The ED probe found that various Indian fintech firms, backed by significant Chinese investments, created Memoranda of Understanding (MoUs) with defunct NBFCs, and gave security deposits in the name of performance guarantees.
NBFCs open separate merchant IDs with payment gateways like Paytm, Razorpay, etc, and credit back the same after deducting some commission (up to 0.5 per cent). This has allowed these fintech companies to start full-scale online lending operations, against the banking regulations.
These fintech companies, through their apps, give unsecured instant micro-personal loans for a term ranging from 15-20 days with minimum due diligence. During the disbursement, they deduct 15-25 per cent of the loan amount, terming it processing fees.
These apps also capture customers’ social media data and mobile data by getting various access privileges, so that they can chase the borrower in case of default. The recovery percentage of these apps is more than 90 per cent.
Notably, each NBFC ties up with at least 30-40 such fintech apps; this helps them generate Rs 1,000 crore per annum. The profits go back to the ultimate beneficiaries who the agency suspects are Chinese nationals.
The ED has, so far, acted against at least NBFCs — Acemoney, Kudos Financial Services, and PC Financial. A few people were arrested and assets were seized. Total assets of over Rs 400 crore have been seized, so far.
The ED has sought revocation of the licence of some defunct NBFCs from the Reserve Bank of India (RBI). In February, it revoked the licence of only one firm.
Officials in the agency said that the RBI is strict about giving a licence but it should also audit the existing NBFCs as there are hundreds which are defunct.