Kudos CEO arrested in Chinese app scam
In the ongoing investigations into the Chinese loans apps, Enforcement Directorate (ED) officials on Saturday arrested Pavitra Pradip Walvekar, promoterdirector and CEO of Kudos Finance and Investment Private Limited, a non-banking financial company (NBFC) under the provisions of the PMLA,
2002.
He was produced before a special court in which remanded him to judicial custody for 15 days.
ED officials have been conducting a money laundering investigation against a number of Indian NBFC companies which are in the business of instant personal loans via mobile apps. It was revealed that various fintech companies backed by Chinese funds have made agreements with these NBFC companies for providing loans in terms ranging from seven days to 14 days.
The fintech companies have gained a total profit of around
`544 crore and Kudos has gained a profit of around `24 crore, ED sources said.
Walvekar is holding
86.04 per cent stake of the company and is the de-facto owner of the company.
This entire arrangement is in complete violation of the RBI guidelines on NBFCs and the entire profit of `568 crore is proceeds from the crime.
Walvekar was not revealing the real identity and beneficial owners of the 39 apps with whom his company was in business for more than a year. Instead of co-operating with the investigation, he had made attempts to obstruct the free and fair investigation by throwing up names of highranking politicians.
“Although it was projected that the NBFC was engaging fintech companies for several activities, in reality they were allowing fintech companies to misuse the valuable NBFC license of Kudos. Kudos has a paltry Net Owned Fund (NOF), but it is taking huge amount as “security deposits” and then opening separate Merchant ID (MID) with payment gateways for each fintech app and depositing these security deposit in the MID of the respective fintech App,” ED officials said.
The probe also revealed that Kudos has a number of mobile apps of its own. It was not involved in the lending business. “All the decisions regarding fixation of interest rate, processing fee, platform fee etc., were taken by fintech companies and these companies were operating on the basis of instructions from Chinese beneficial owners. They capture customers data by getting access to their mobile contacts and media,” ED officials said.
The ED officials also done fund trail investigation that was revealed that despite having NOF of only Rs 10 crore, Kudos circulated loans totaling to Rs 22,24,15,11,508 in its name and it was entirely funded by 39 fintech companies.
Unable to bear the level of harassment, some gullible consumers have ended their lives by suicide. Moreover, at the time of loan disbursal itself, the apps would deduct 15 per cent to 25 per cent of the amount as processing fee and on the remaining amount they were charging a very high interest rate. They claimed a loan recovery rate of around 95 per cent.
The ED officials have also lodged a complaint with the Hyderabad Central Crime Station (CCS) officials in connection with a loan apps scam submitting fake bills and invoices. According to police, at least `1,400 crore scam took place in the illegal activity. Joint Commissioner of Police, CCS, Avinash Mohanty said that they received a complaint from ED officials in connection with the irregularities and registered cases.
THE PROBE also revealed that Kudos has a number of mobile apps of its own. It was not involved in the lending business.