The Enforcement Directorate (ED) has acknowledged the seizure of Rs 288 crore made against Chinese-owned PC Financial Services Private Limited under the Foreign Exchange Management Act (FEMA).
Through three seizure orders filed last year, the ED took the money's balance in bank and Payment Gateway funds.
The action was conducted as part of an investigation into several non-banking financial companies (NBFCs) and fintech companies that were offering online fast micro-loans via mobile apps.
They were accused of extorting excessive interest rates from customers by exploiting their personal information and threatening them with legal action.
Mobile application ‘Cashbean’
PC Financial Services, an NBFC that provides fast personal microloans through its mobile application 'Cashbean,' was also found to have violated the Prevention of Money Laundering Act during the examination.
Suspicious outgoing remittances from abroad were scrutinised.
The corporation was eventually beneficially owned by Chinese national Zhou Yahui, according to the ED. For the lending industry, its overseas parent companies brought in foreign direct investment totalling Rs 173 crore.
According to the agency, the company sent ₹429.29 crores in foreign external remittances to Chinese-controlled foreign-related companies in the name of payments for non-existent software services in a short period.
High domestic expenditure
PC Financial Services is also accused of having a large domestic expenditure of Rs. 941 crore. The ED discovered that extravagant payments were "blindly" approved by PC Financial Services' "dummy" Indian directors without any due diligence and on the orders of the country head, Zhang Hong, who reported directly to Mr Zhou Yahui.
The ED determined that the corporation had violated FEMA regulations and seized assets of comparable value. The Reserve Bank of India and the Income-Tax Department have both launched investigations into the NBFC as a result of their investigations.
The company declared in a statement to the media in October that compliance was its first concern and that it had done its utmost to obey all laws, rules, norms, and conditions. "We will continue to operate within the revered ambit of the law with the utmost dedication as we have been doing," it had said.