The Enforcement Directorate (ED) arrested the CEO of a non-bank financial corporation (NBFC) in a money laundering investigation against Chinese fund-backed financial technology companies, said on Saturday. the agency.
The agency arrested Pavitra Pradip Walvekar, promoter, director and CEO of Kudos Finance and Investment Private Limited on Friday.
He was then brought before a special tribunal under the Prevention of Money Laundering Act (PMLA) in Hyderabad which sent him into judicial detention for 15 days.
The action is part of the ED’s investigation against a number of NBFCs that deal in instant personal loans through mobile apps.
In a statement, the agency said 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.
“Assist in the collection / collection of principal and interest payments and respond to service requests or product inquiries for retail loans offered by the company,” the agency said.
Although the NBFC is expected to hire FinTech companies for these activities, the ED said, “In effect, they are allowing FinTech companies to abuse Kudos’ valuable NBFC license.”
The central agency further said that Kudos has a paltry Net Held Fund (NOF), but takes a huge amount as security deposits and then opens a separate Merchant ID (MID) with gateways from payment for each fintech app, then deposited those security deposits into the MID. of the respective fintech application, ”said the agency.
According to the statement, the Kudos company does not have its own mobile application. “He is not involved in lending at all. He has tiny staff and blindly allows FinTech companies to operate under Memoranda of Understanding between themselves (NBFCs) and fintech mobile app companies So the whole lending operation is done by the fintech app from its own funds, ”he said.
Kudos is just lending its license and fintech apps are the ones that act like the real NBFCs and do end-to-end microloans and reap the majority of the benefits. In return, Kudos takes a commission without doing due diligence and hard work, the agency said.
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