News Analysis India

Tag: PC Financial Services

  • ED crackdown on owners of Cashbean loan app continues, Rs 300 crore attached

    By Express News Service

    NEW DELHI: The Enforcement Directorate (ED) has seized an additional amount of Rs 51.22 crore lying in the bank accounts and virtual accounts with payment gateways of fintech company PC Financial Services Private Limited (NBFC). The enforcement agency has already attached Rs 238 crore from the Gurgaon-based PC Financial Services, which provides instant personal microloans through its mobile application ‘Cashbean’.

    ED has alleged that the PCFS is controlled by a Chinese national through a maze of shell companies. It has also accused the firm of money laundering and violation of the Foreign Exchange Management Act (FEMA).

    According to the enforcement agency, PCFS is a wholly-owned subsidiary of Oplay Digital Services, SA de CV, Mexico, which is, in turn, is owned by TenspotPesa Limited of Hong Kong.  TenspotPesa, on the other hand, is owned by Opera Limited (Cayman Islands) and Wisdom Connection I Holding Inc (Cayman Islands), which are ultimately beneficially owned by Chinese national Zhou Yahui. 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 moved to the Chinese controlled company.

    ED’s investigations reveal that the fintech company provides micro loans through its mobile app for suspicious foreign outward remittances.

    Investigations have found that the foreign parent companies of PCFS brought in Rs 173 Crore worth of FDI for lending business and within a short span of time, made foreign outward remittances worth Rs 429 crore in the name of payments for software services received from related foreign companies.

    The fintech company also showed high domestic and foreign expenditures.  A 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.

    ED has also found that exorbitant payments were allowed by the dummy Indian Directors of PCFS without any due diligence on the instructions of the Country Head Zhang Hong, who directly reported to one Zhou Yahui in China.

    PCFS remitted forex worth Rs 429 Crore to 13 foreign companies located in Hong Kong, China, Taiwan, USA and Singapore in the guise of payments for the License fee for Cash Bean Mobile APP (Rs 245 Crore per annum), Software technical fee (of around Rs 110 Crore), online marketing & advertisement fee (of around Rs 66 Crore).

    According to the Enforcement Directorate, all these services and applications are available in India at a fraction of the cost incurred by PCFS.

    The agency further says that though all the clientele of the NBFC was in India, huge payments were made abroad without any proof of receipt of service. Simultaneously, during the same period of time, PCFS also booked domestic expenditure of a similar amount (of Rs 941 crore) under the same heads of expenditure.

    PCFS management failed to give any justification for these expenses and admitted that all remittances were done to move money out of India and to park it abroad in the accounts of Group Companies controlled by the Chinese promoter.

  • ED seizes Rs 131-crore funds of Chinese-controlled NBFC for foreign exchange law violation

    By PTI

    NEW DELHI: The Enforcement Directorate Thursday said it has seized over Rs-131 crore funds of a Chinese national-owned NBFC for alleged violation of foreign exchange law.

    The non-banking financial company (NBFC) is PC Financial Services Pvt Ltd and it was in the business of providing instant personal micro loans through its mobile application ‘Cashbean’ for suspicious foreign outward remittances.

    This case came under the ED radar during a separate money laundering probe against a number of NBFCs and FinTech companies which are linked to instant personal loans providing mobile apps.

    These loans were being dished out with a “high rate of interest and recovered using personal data of the customer illegally and threatening and abusing them through call centers”.

    The alleged illegalities of these apps were reported from a number of states last year, especially following the COVID-19 lockdown economic stress, and a number of people were reported to have been driven to end their lives due to the extortion and bullying of these “dubious” companies.

    “PCFS is a wholly owned subsidiary (WOS) of Oplay Digital Services, SA de CV, Mexico, which is in turn a WOS of Tenspot Pesa Limited, Hong Kong which is owned by Cayman Islands based Opera Limited and Wisdom Connection I Holding Inc which are ultimately beneficially owned by Chinese National Zhou Yahui,” the ED said in a statement.

    The original Indian company PCFS was incorporated in 1995 by Indian nationals and it got NBFC license in 2002 and after an RBI approval in 2018, the ownership moved to the Chinese controlled company.

    PCFS, the ED alleged, “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.

    “Thus, PCFS has contravened provisions of the Foreign Exchange Management Act (FEMS). RBI has been informed about the above contraventions,” it said.

    The ED has seized a total of Rs 131.11 crore worth funds kept in various bank and payment gateway accounts, under the provisions of the FEMA.

    It has similarly seized Rs 106.93 crore worth funds of the same NBFC in August.

    Probe found that the foreign parent companies of PCFS brought FDI (foreign direct investment) of Rs 173 crore for lending business and within a short span of time, made foreign outward remittances of Rs 429.29 crore in the name of payments for software services received from related foreign companies, it said.

    “PCFS also showed high domestic expenditure of Rs 941 crore. 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,” it said.

    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, a resident of China, it said.

    PCFS, it said, remitted forex of Rs 429 crore to 13 companies located in Hong Kong, China, Taiwan, USA and Singapore in the guise of payments for license fee for Cashbean mobile app (Rs 245 crore per annum), software technical fee (of around Rs 110 crore) and online marketing and advertisement fee (about Rs 66 crore).

    “All these services and applications are available in India at a fraction of the cost incurred by PCFS,” the ED claimed.

    Moreover, all the clients of the NBFC was in India, despite that huge payments were made abroad and no proof of receipt of service is there, it said.

    During the same period of time, the ED said, PCFS also booked domestic expenditure of similar amount under the same heads of expenditure.

    “PCFS management failed to give any justification for these expenses and admitted that all remittances were done to move money out of India and to park it abroad in the accounts of group companies controlled by the Chinese promoter,” it said.