On September 3, the Enforcement Directorate (ED) spoke about 6 online payment gateway locations in Bengaluru. They were raided because of alleged irregularities in mobile app-based loans “managed” by Chinese individuals.
Which companies were targeted?
According to the ED, Razorpay, Paytm, and Cashfree were among the companies raided. Paytm declined to comment, but Razorpay and Cashfree suggests that they were collaborating with government officials. Cashfree Payments claims that their “operations and on-boarding processes comply with the PMLA and KYC guidelines, and we will continue to do so.”
“We did offer the ED our full cooperation. On the same day of inquiry, we provide them with the necessary information “The spokesperson continued.
“A year and a half ago, law enforcement was looking into some of our merchants. As part of the ongoing investigation, authorities have requested additional information to aid in the investigation “According to a Razorpay spokesperson.
Why companies are targeted?
The Reserve Bank of India (RBI) is worried about the spread of Chinese loan apps. Many of these began operations during the pandemic, primarily targeting the vulnerable.
These digital lending platforms charged exorbitant interest rates and used coercion to recover the funds. Customers who obtained loans from these lenders did so because the process was straightforward and required little paperwork. Such methods of acquiring customers were inexpensive for the lenders.
However, the RBI felt compelled to intervene to limit not only these excesses but also lending arrangements between banks or NBFCs (non-banking financial companies) and digital platforms.
What does ED have to say?
This money laundering case, according to the ED, was based on at least 18 FIRs filed by the Bengaluru Police cyber crime station. The complaints are as follows: “in connection with their involvement in extortion and public harassment The public had obtained small loans through the mobile apps operated by those entities/persons.”
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