The Enforcement Directorate (ED) carried out raids on six premises – including Paytm and Razorpay – in Bangalore on Saturday while investigating the Chinese loan app case.
While the investigation is still ongoing, the polling firm seized an amount of ₹17 crore from merchant IDs and bank accounts of entities controlled by Chinese persons under the provisions of the 2002 prevention of money laundering (PMLA).
The case is based on 18 FIRs registered by the Bengaluru Cybercrime Police Station against numerous entities and individuals in relation to their involvement in extortion and harassment of the public who had availed small amounts of loans through the apps mobiles managed by these entities.
The raid comes a day after the Reserve Bank of India (RBI) issued new guidelines for digital lending apps, ordering such platforms to refrain from accessing mobile phone resources such as files. and media, contact list, call logs, telephony functions, etc.
During investigations, it emerged that these entities are controlled and operated by Chinese persons.
The modus operandi of these entities is to use false documents of Indians and make them bogus directors of these entities, they generate proceeds of crime, says the Directorate of Law Enforcement.
“The said entities were found to be carrying out their suspicious/illegal activities through various merchant IDs/accounts held with payment gateways/banks. The premises of Razorpay Pvt Ltd, Cashfree Payments, Paytm Payment Services Ltd and entities controlled/operated by Chinese people are covered by the search operation,” the investigative agency said.
The investigation indicates that these entities were generating proceeds of crime through various merchant IDs and accounts held with payment gateways and banks. They also do not operate from the addresses given on the MCA website or the registered address and have fake addresses, he adds.
Meanwhile, the RBI, as part of its digital lending guidelines released on Friday, said regulated entities such as banks and NBFCs must communicate to the borrower, at the time of loan sanctioning and also at the time of transfer of collection responsibilities to a Lending Service Provider (LSP) or change of LSP in charge of collection, the contact details of the LSP acting as collection agent authorized to approach the borrower for collection.
The central bank said any data collection by their digital lending apps should be needs-based and with the prior and explicit consent of the borrower.
The purpose of obtaining borrowers’ consent must be disclosed at every stage of interfacing with borrowers, the banking regulator said, adding that the borrower’s explicit consent must be collected before sharing personal information with a third.
Banks and NBFCs must have adequate systems and processes in place by November 30, 2022, to ensure that existing digital loans also comply with these guidelines, according to the RBI.
