The Income-Tax Department has conducted searches against a Fintech company, which provides instant short-term personal loan through its mobile application, in Delhi and Gurugram.
During the operation, it was found that the company had been allegedly charging very high processing fee at the time of disbursing loans. “This results in effectively higher burden of compensation on the borrowers. The said company is held by a group based in Cayman Islands, ultimately controlled by an individual of a neighbouring country,” said the I-T Department.
As it turned out, the internal web-based application used for the lending business was being controlled from outside India.
The company had brought into the country a nominal initial capital through the Foreign Direct Investment route, but took substantial working capital loans from Indian banks. “The business model of the company results in high rotation of capital, which is evidenced by a turnover of Rs.10,000 crore in its first year of operation,” the department said.
It noticed repatriation of about Rs. 500 crore by the company to its overseas group entities on the pretext of buying of services in two years. “However, evidence gathered during the search revealed that such remittances made to the group companies are either highly inflated or non-genuine,” it stated.
ED probing scam
In a similar case, the Enforcement Directorate has been probing an alleged scam involving extortion of high interest rates against micro-personal loans given via a mobile app.
The company that provides the micro loans is a wholly-owned subsidiary of a Mexico-based company that is a wholly-owned subsidiary of another company in Hong Kong, which in turn is co-owned by two Cayman Islands-based companies.
It remitted foreign exchange running into hundreds of crores to 13 foreign companies located in China, Taiwan, Hong Kong, Singapore and the United States and Singapore on various pretexts.
