ED attaches Rs 859 cr proceeds of crime in illegal loan app cases, says MoS Finance

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The Directorate of Enforcement has attached proceeds of crime worth Rs 859.15 crore generated by accused persons/entities through illegal loan apps, Minister of State for Finance Bhagwat Karad said on Tuesday. Further, assets amounting to Rs 289.28 crore have been seized under the Foreign Exchange Management Act, 1999.

In a written reply to a query in Rajya Sabha, Karad said Reserve Bank of India (RBI) has furnished the list of Digital Lending Apps (DLAs) being used by regulated entities of RBI to the Ministry of Electronics & Information Technology (MeitY).

MeitY has shared the list with respective intermediary (App Stores) and requested them to ensure that only the apps figuring in the list are hosted on their app stores.
The RBI's digital lending guidelines issued in September advises measures, including due diligence of Loan Service Providers (LSPs), direct disbursal of loan from bank account of lender to bank account of the borrower without any pass-through/pool or third-party account to avoid layering.

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To a question on how the government is addressing the issues of money laundering through illegal loan apps, Karad said the Directorate of Enforcement (ED) has been entrusted to curb money laundering under the provisions of PML Act, 2002. ED has initiated investigation under PMLA in several cases where the proceeds of crime has been generated and acquired by accused persons/entities through illegal loan apps.

"In these cases, as on date, proceeds of crime of Rs 2,116 crore (approx) has been identified, out of which proceeds of crime amounting to Rs 859.15 crore have been attached/ seized/ freezed under the provisions of PMLA. Further, assets amounting to Rs 289.28 crore have been seized under section 37A of Foreign Exchange Management Act, 1999," Karad said.

Over the last year, enforcement agencies found a number of loan apps which were found to have been indulging in predatory lending, charging high interest rates and fees. Harassment of users over the repayment of their dues have led to reported incidents of dozens of suicides.

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