FEMA violations: ED seizes Rs. 252 crore from Chinese-controlled loan app
Hyderabad: The Enforcement Directorate (ED), Hyderabad cracked a whip against M/s. PC Financial Services Pvt. Ltd (PCFS), a subsidiary of M/s. Opera Group, Norway, and seized Rs. 252.36 crore under the Foreign Exchange Management Act (FEMA), 1999.
The premier money laundering agency’s FEMA investigation revealed that PCFS, controlled by Chinese beneficial owners, was lending money to the public in India through its mobile app “CashBean.” The central agency said, “Huge remittance of Rs. 429.30 Crore (approx.) was made by PCFS to its overseas Group Companies under ‘Import of Software Licenses and Services’ which were found to be bogus.”
In 2022, RBI observed that PCFS was found to be charging usurious rates of interest rates and other charges to borrowers in an opaque manner. Additionally, PCFS was indulging in unauthorized use of logos of Reserve Bank and Central Bureau of Investigation for recovery from the borrowers, violating the Fair Practices Code. RBI cancelled PCFS’sCertificate of Registration and debarred it from acting as a Non-Banking Financial Institution.
In the same year, ED filed a complaint before the Adjudicating Authority against PCFS and others, u/s 16 of FEMA, charging them for violations of various provisions of FEMA. The complaint included a prayer to confiscate the PCFS properties seized vide the Seizure Orders.
ED exposes Chinese loan app’s Illegal money flows, Imposes Rs. 2146 crore penalty
“After considering the complaint, a Show Cause Notice was issued. Opportunity for personal hearing was offered to the Noticees, which they availed. However, one of the Noticees, Zhang Hong, the then Country Head of PCFS during the contravention period, neither replied to the Show Cause Notice nor availed the opportunity of personal hearing,” said ED.
Adjudication proceedings have been completed after following due process of law. Upon careful examination of the alleged violations levelled against the Noticees’ written replies and personal hearing submissions, the alleged FEMA violations have been proved. Accordingly, per the 2024 Adjudication Order, properties worth Rs. 252.36 Crore of PCFS in India were seized under FEMA. In addition to that, a penalty totalling to Rs. 2146 crores was imposed.
The investigation led to the seizure of PCFS properties in India worth Rs. 252.36 Crore, under Section 37A of FEMA viathree Seizure Orders in 2021.
