Besides Razorpay, three fintech companies controlled by Chinese nationals and three NBFCs have also been named in the chargesheet
The ED began the probe in the matter based on FIRs registered by CID Bengaluru on complaints from customers about harassment from recovery agents of digital lending apps
Razorpay has been under the radar of the ED, which has cracked down on illegal lending apps. Last year, the agency also conducted search operations at the office of the unicorn
The Enforcement Directorate (ED) has filed a chargesheet against fintech unicorn Razorpay, six other entities, and five individuals for money laundering in a Chinese loan app case.
The chargesheet was filed in a special Prevention of Money Laundering Act (PMLA) court in Bengaluru and the court has taken cognisance of it, the ED said in a statement on Friday (March 18).
Besides Razorpay, the chargesheet includes three fintech companies – Mad Elephant Network Technology Pvt Ltd, Baryonyx Technology Pvt Ltd and Cloud Atlas Future Technology Pvt Ltd – which are controlled by Chinese nationals, it added.
Three non-banking financial companies (NBFCs) – X10 Financial Services Pvt Ltd, Track Fin-ed Pvt Ltd, Jamnadas Morarjee Finance Pvt Ltd – have also been named in the chargesheet.
The ED began the probe in the matter based on FIRs registered by CID Bengaluru on complaints from customers about harassment from recovery agents of digital lending apps.
Earlier, the agency issued two provisional attachment orders in the case and seized INR 77.25 Cr lying in the bank accounts and payment gateways.
“During investigation, it was revealed that the money lending business is being illegally run by these fintech companies and these NBFCs knowingly let these fintech companies use their names for the sake of getting commission without being careful about the conduct of these fintech companies. The same is also a violation of the Fair Practices Code of the RBI,” the ED said in the statement, adding that further investigation in the case is ongoing.
The ED has cracked down on illegal digital lending apps over the last year or so for charging exorbitant interest rates, harassing customers, and their involvement in money laundering. Many of these apps have connections with Chinese entities or nationals.
This is not the first time that RazorPay has come under the scanner in the investigation. Last year, the ED also conducted search operations at the premises of the fintech major.
Owing to the rising menace of the illegal digital lending apps, the Reserve Bank of India (RBI) released the digital lending guidelines in August last year. Finance Minister Nirmala Sitharaman also held a meeting on the issue of illegal loan apps, and directed the RBI to prepare a white list of legal digital lending apps.
Last month, the government informed the Parliament that the RBI has shared a list of regulated lending apps with the Ministry of Electronics and Information Technology (MeitY). The MeitY would further share this list with app stores and allied platforms and ask them to host only the apps mentioned in the list.
The Centre also blocked over 232 online betting app and loans apps last month, including Prosus-backed LazyPay, Kissht, Ola’s Avail Finance for their alleged Chinese links. However, the ban on many of these apps was lifted later.
