Hyderabad: The Enforcement Directorate (ED) has submitted a prosecution complaint (PC) against multiple Non-Banking Financial Companies (NBFCs), fintech firms, and individuals involved in the instant loan lending sector via various 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 investigation was prompted by 43 FIRs registered between 2020 and 2021 by cyber crime police in Cyberabad and Rachakonda, which pertained to various mobile applications and phone numbers linked to different fintech companies and NBFCs.
The Enforcement Directorate (ED) investigation uncovered that multiple fintech firms used their capital to form partnerships with inactive or underperforming NBFCs.
These entities then offered short-term loans at inflated interest rates and levied exorbitant processing fees through mobile applications.
The mobile loan apps, while approving loans, gained unauthorized access to borrowers’ private information like images and contact details.
This data was exploited to pressure borrowers into repaying loans. Borrowers were also enticed with additional loans at higher interest rates through affiliated apps to repay existing loans, leading to debt traps.
The coercive tactics employed by these companies drove several borrowers to take their own lives.
Previously, the Enforcement Directorate (ED) had issued five provisional attachment orders, seizing properties worth Rs 346.8 crore belonging to fintech companies and NBFCs involved in the instant loan app scam.
Furthermore, during search operations, the agency froze Rs 434 crore in proceeds of crime in the form of bank account balances.
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