Competent Authority under FEMA, Commissioner of Customs Chennai has confirmed the full seizure of ₹288 crore carried out by ED against Chinese PC Financial Services NBFC.
Directorate of Enforcement (ED) had seized Bank/Payment Gateway funds worth ₹288 crore belonging to PC Financial Services Private Limited (NBFC) vide 3 seizure orders issued under the provisions of Foreign Exchange Management Act, 1999 (FEMA).
ED is investigating a number of NBFCs and Fintech companies under PMLA, 2002 for providing online instant micro-loans using mobile applications (APPs) and then extorting high rate of interest by misusing the personal data of the customers and allegedly threatening and abusing them through call centers.
Suspicious foreign outward remittances
During the course of money laundering investigation, ED also initiated investigation under FEMA against PC Financial Services Private Limited, an NBFC company, that provides instant personal micro loans through its mobile application ‘Cashbean’ for suspicious foreign outward remittances.
PCFS is ultimately beneficially owned by Chinese National Zhou Yahui. Investigation further revealed that the foreign parent companies of PCFS brought in FDI worth ₹173 crore for lending business and within a short span of time, made foreign outward remittances worth ₹429.29 crore to Chinese-controlled foreign related companies, in the name of payments for non-existent software services.
PCFS also showed high domestic expenditure of ₹941 crore. ED has found that exorbitant payments were blindly allowed by the dummy Indian Directors of PCFS without any due diligence and on the instructions of the Country Head Zhang Hong, who directly reports to Zhou Yahui of China. Hence, PCFS had contravened FEMA provisions and equivalent assets were liable for seizure. Hence, seizure orders were issued.
Further based on the ED investigation, RBI and IT Department have also initiated enquiry against the said NBFC.
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