HYDERABAD: The Enforcement Directorate (ED) in Hyderabad has submitted a prosecution complaint against various non-banking financial companies (NBFCs), fintech firms, and individuals involved in the instant loan sector through multiple mobile applications. This complaint was filed with the special MSJ Court in Nampally, Hyderabad, under the Prevention of Money Laundering Act (PMLA). The court acknowledged the complaint on Thursday.
The ED’s probe began after 43 FIRs were filed between 2020 and 2021 by cyber crime units in Cyberabad and Rachakonda. These reports pertained to different mobile apps and numbers linked to various fintech and NBFC entities.
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The investigation uncovered that several fintech companies had invested their funds in agreements with inactive or underperforming NBFCs. These companies engaged in short-term lending with extremely high interest rates and excessive processing fees via mobile apps. Furthermore, these apps accessed and misused borrowers’ private data, including personal images and contact information, to pressure them into repaying their loans. Borrowers were often enticed with additional loans at higher rates to settle existing debts, resulting in severe debt traps and, in some cases, tragic outcomes for borrowers.
Previously, the ED had issued five provisional attachment orders, resulting in the seizure of assets worth Rs 346.8 crore from fintech firms and NBFCs. Additionally, bank account balances totaling Rs 434 crore were frozen during the searches.
