New Delhi, December 18
The Directorate of Enforcement (ED) announced on Saturday that it had arrested the CEO of a non-bank financial company (NBFC) in connection with a money laundering investigation against fintech companies “backed” by Chinese funds .
Pavitra Pradip Walvekar, promoter, director and CEO of Kudos Finance and Investment Private Limited, an NBFC, was arrested on Friday.
He was then brought before a special court under the Prevention of Money Laundering Act (PMLA) in Hyderabad which sent him to judicial detention for 15 days, the agency said in a statement.
The action relates to the ED’s investigation against a number of Indian NBFCs that deal in instant personal loans through mobile apps (apps).
“Various financial technology companies backed by Chinese funds have entered into agreements with these NBFC companies to provide instant personal micro-loans with terms ranging from seven to 14 days,” the statement said.
“Kudos NBFC allegedly engages financial technology companies (digital lending partners) as a service provider to help identify potential customers, verify eligibility, collect information / documents, perform due diligence, collect pre-documentation -disbursement, organize the execution of the loan agreement, assist in the recovery / recovery of principal and interest payments and respond to service requests or inquiries related to products for retail loans offered by the company ”, the agency said.
Although the NBFC is expected to hire FinTech companies (short for Fintech) for these activities, the CEO said, “In effect, they are allowing FinTech companies to abuse the valuable NBFC license of Kudos. ”
“Kudos has a paltry Net Held (NOF), but he takes a huge amount as security deposits, then opens a separate Merchant ID (MID) with payment gateways for each fintech app, and then deposits those deposits from. guaranteed in the MID of the respective fintech. app, ”the agency said.
The company, Kudos, he said, does not have a mobile app of its own.
“She is not involved in the lending business at all. It has a tiny staff and blindly allows fintech companies to operate behind memoranda of understanding between themselves (NBFC) and fintech mobile app companies.
“Thus, the entire loan operation is carried out by the fintech application from its own funds,” he said.
The NBFC defendant is just lending his license and fintech apps are the ones that act like the “real NBFCs” and do end-to-end micro-lending and “reap” majority benefits “.
“In return, Kudos takes a commission without doing due diligence and hard work,” said the managing director. PTI