Law Enforcement Directorate Seizes Rs 131 Crore From Chinese Loan Application Company For FEMA Breach | Hyderabad News

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HYDERABAD: The Directorate of Execution (ED) seized 131 crore rupees from bank accounts and virtual accounts with payment gateways owned by the loan application company PC Financial Services (PCFS) Private Limited in under the provisions of the Foreign Exchange Management Act (FEMA). With the latest action, ED has so far seized Rs 237 crore belonging to the company.
ED had discovered FEMA violations while investigating money laundering allegations against the loan application company and seized Rs 106 crore earlier.
The company offers instant personal micro-loans through its “Cashbean” mobile application. It turned out to contain suspicious foreign remittances. PCFS allegedly illegally remitted huge funds outside India under the guise of non-existent software imports and marketing services to park funds overseas and hold them in the accounts of related foreign companies.
PCFS is a 100% subsidiary of Oplay Digital Services, SA de CV of Mexico, which in turn is a 100% subsidiary of Tenspot Pesa Limited of Hong Kong. Tenspot is owned by Opera Limited and Wisdom Connection I Holding Inc of the Cayman Islands, ultimately owned by Chinese national Zhou Yahui. The original Indian company, PCFS, was incorporated in 1995 by Indian nationals and obtained the NBFC license in 2002. After RBI approval in 2018, ownership was transferred to the Chinese-controlled company.
ED, in a press release on Thursday, said: “The investigation further revealed that the foreign parent companies of PCFS had contributed FDI worth Rs 173 crore for lending activities and, in a Short period of time, have made overseas remittances worth Rs 429 crore on behalf of payments for software services received from related foreign companies. PCFS also showed high domestic spending of Rs 941 Crore.
“A detailed survey of foreign spending paid by the NBFC found 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, ED said in the communicated.
ED found out that exorbitant payments were blindly authorized by the bogus Indian directors of PCFS without any due diligence and, on the instructions of country chief Zhang Hong, who reported directly to Zhou Yahui.
“PCFS handed over currency worth Rs 429 crore to 13 foreign companies in Hong Kong, China, Taiwan, United States and Singapore as payment of license fees for the mobile app ‘Cashbean ‘Rs 245 crore per year, software technical fee of around Rs 110 crore, online marketing and advertising fee of around Rs 66 crore. These services are available in India at a fraction of the cost incurred by PCFS, ”said declared ED.


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