Loan App Company Penalized ₹2,146 Crore In Hyderabad

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The Enforcement Directorate (ED) has imposed a massive penalty of ₹2,146 crore on PC Financial Services Private Limited (PCFS), a non-banking financial company (NBFC) running the loan app ‘CashBean’, for violating the Foreign Exchange Management Act (FEMA). This marks the first time an NBFC operating a loan app has faced such a huge penalty in India.

The decision was made on October 7 by ED’s adjudicating authority, which also ordered the confiscation of PCFS’s properties worth ₹252 crore in India as part of the proceedings.

Key Details:

Company Involved: PC Financial Services Private Limited (PCFS).
Allegations: Links to Chinese and Norwegian entities and fraudulent remittances.Loan App: ‘CashBean’.
Illegal Activities: Sending ₹429 crore to related group companies abroad for fake software licences and services.

PCFS is a subsidiary of Norway’s Opera Group, but investigations by the Hyderabad unit of the ED revealed that the company was allegedly controlled by Chinese owners. The company was involved in lending money to Indian customers through its mobile app ‘CashBean’. The ED’s findings indicated that PCFS transferred significant funds overseas under the guise of purchasing software licenses and services, which were later found to be fraudulent transactions.

The Reserve Bank of India (RBI) had flagged the company two years ago for charging extremely high interest rates and unauthorized fees. Additionally, PCFS was using logos of the RBI and CBI without permission, which was against the fair practices code. As a result, the RBI canceled the certificate of registration of PCFS, effectively barring it from functioning as an NBFC.

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