The Enforcement Directorate (ED) has taken strong action against CashBean, a loan app controlled by Chinese entities, by ordering the seizure of assets worth Rs. 252 crore. This move comes amid a Foreign Exchange Management Act (FEMA) investigation into the app’s illegal loan operations in India. Along with the asset seizure, a massive fine of Rs. 21 billion (Rs. 21,46,48,26,480) has been imposed on the company.
Norwegian-Owned Firm Under Chinese Control
CashBean is operated by PC Financial Services Pvt. Ltd. (PCFS), a subsidiary of Norway’s Opera Group, which is reportedly controlled by Chinese owners. The app offers personal loans in India, but the ED has uncovered significant irregularities in its business practices. According to the agency, PCFS transferred Rs. 429.30 crore to foreign group companies under the pretense of “importing software licenses and services,” which has now been exposed as a fake transaction.
Illegal Loan Practices and RBI Involvement
The Reserve Bank of India (RBI) has also taken action against PCFS for charging excessive interest rates and hidden fees, violating fair practice standards. In February 2022, RBI discovered that the company was misleading borrowers by unlawfully using the logos of RBI and CBI for debt collection. Following this, RBI revoked PCFS’s registration as a non-banking financial company (NBFC), effectively halting its operations.
Violation of FEMA Regulations
The investigation into PCFS started in 2021 when the ED initially froze assets worth Rs. 252.36 crore, which was later approved by the competent FEMA authority in 2022. PCFS challenged the order, but the final decision is still pending. In June 2022, ED filed a formal complaint regarding the company’s violations of FEMA, leading to a show cause notice being served. The company’s regional head at the time, Zhang Hong, did not respond to the notice or attend the personal hearing.
ED’s Final Action
After reviewing the facts, the adjudicating authority confirmed violations of FEMA rules by PCFS, resulting in the seizure of Rs. 252.36 crore in assets. Along with the asset confiscation, the company has been slapped with a massive fine exceeding Rs. 21 billion.
The ED’s swift action sends a strong message against illegal loan practices and highlights the ongoing scrutiny of foreign-owned companies operating in India under questionable practices.
