The Directorate of Enforcement has seized ₹106.93 crore, lying in bank accounts and virtual accounts with payment gateways, belonging to PC Financial Services Private Limited under the provisions of the Foreign Exchange Management Act, 1999 (FEMA).

This is part of ED’s investigation of a number of NBFCs and fintech companies under PMLA, for providing instant micro-loans using mobile apps and then extorting high rates of interest by using the personal data of the customers illegally and threatening and abusing them through call centres.

PC Financial Services Private Limited (hereinafter PCFS), an NBFC that provides instant personal micro loans through its mobile application ‘Cashbean’, is owned by Chinese National Zhou Yahui through multiple layers of companies that are based in Mexico and Cayman Islands. The original Indian Company PCFS was incorporated in 1995 by Indian nationals and got NBFC license in 2002 and after RBI approval in 2018, the ownership transferred to the Chinese entity.

The 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 in the guise of making payments for software services received from related foreign companies.

“Detailed investigation into the foreign expenses paid by the NBFC revealed that most of the payments were made to foreign companies, which are related and owned by the same Chinese Nationals, who own the Opera Group. All foreign service providers were chosen by the Chinese owners and the price of the services was also fixed by them. 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 reported to Zhou Yahui,” the ED said.

PCFS allegedly remitted forex worth ₹429 Crore to 13 foreign companies located in Hongkong, China, Taiwan, USA, and Singapore in the guise of payments for license fee for Cashbean mobile app (~245 crore per annum), software technical fee (~₹110 Crore), online marketing and advertisement fee (~₹66 crore).

“PCFS has illegally remitted huge funds outside India in the guise of imports of non-existent software and marketing services to park the funds abroad and hold them in the accounts of related foreign companies. PCFS has contravened provisions of FEMA, 1999, and thus ED after identifying the local assets of PCFS and the NBFC has issued an order under FEMA 1999 for seizing the amount of ₹106.93 crore,” ED said

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