The Enforcement Directorate (ED) on Saturday carried out search operations at six premises – including Paytm and Razorpay – in Bengaluru while investigating the Chinese loan app case.
While the search is still on, the probe agency has seized an amount of ₹17 crore in merchant IDs and bank accounts of entities controlled by Chinese persons under the provisions of the Prevention of Money Laundering Act (PMLA), 2002.
The case is based on 18 FIRs registered by Cyber Crime Police Station, Bengaluru against numerous entities and persons in connection with their involvement in extortion and harassment of the public who had availed small amounts of loans through the mobile apps being run by those entities.
The raid comes a day after the Reserve Bank of India (RBI) issued fresh guidelines for digital lending apps, ordering such platforms to desist from accessing mobile phone resources like file and media, contact list, call logs, telephony functions, etc.
During enquiries, it has emerged that these entities are controlled and operated by Chinese persons.
The modus operandi of these entities is by using forged documents of Indians and making them as dummy directors of those entities, they are generating proceeds of crime, the Enforcement Directorate claims.
"It has come to notice that the said entities were doing their suspected/illegal business 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 Persons are covered in the search operation," the probe agency says.
The investigation says these entities were generating proceeds of crime through various merchant IDs and accounts held with payment gateways and banks. They are also not operating from the addresses given on the MCA website or registered address and having fake addresses, it adds.
Meanwhile, a Razorpay spokesperson clarified that a few of its merchants were being investigated by law enforcement about a year and a half back. "As part of the ongoing investigation, the authorities requested additional information to help with the investigation, to which we promptly responded. The authorities were satisfied by our due diligence process. We would also like to clarify that zero funds were seized from Razorpay during this visit," it said.
The RBI, as part of its digital lending guidelines released on Friday, said that regulated entities like banks and NBFCs shall communicate to the borrower, at the time of sanctioning of the loan and also at the time of passing on the recovery responsibilities to a lending service provider (LSP) or change in the LSP responsible for recovery, the details of the LSP acting as recovery agent who is authorised to approach the borrower for recovery.
The central bank said any collection of data by their digital lending apps should be need-based and with prior and explicit consent of the borrower.
The purpose of obtaining borrowers' consent needs to be disclosed at each stage of interface with the borrowers, the banking regulator said, adding that explicit consent of the borrower shall be taken before sharing personal information with any third party.
Banks and NBFCs have to put in place adequate systems and processes by November 30, 2022, to ensure that existing digital loans are also in compliance with these guidelines, as per the RBI.
