FEMA violation: PC Financial Services fined ₹2,146 crore for FEMA violations linked to Chinese ownership | Hyderabad News

HYDERABAD: The adjudicating authority of the Enforcement Directorate has imposed a fine of `2,146 crore on PC Financial Services Private Limited (PCFS), a non-banking financial company, operating a loan application allegedly linked to Chinese and Norwegian entities for violations of the Foreign Exchange Management Act.
This is the first such case where an NBFC operating a lending app is hit with a huge fine in the country.
The arbitration proceedings concluded on October 7 with the ED jurisdiction ordering confiscation of PCFS properties worth 252 crores in India.

An ED official said, “After carefully considering the alleged violations made against the notices and their written submissions made during the personal hearings, it was found that the alleged violations of FEMA have been clearly proven.”
PCFS, a subsidiary of the Norwegian Opera Group, has been put under surveillance after the ED Hyderabad unit’s investigation revealed that the company, allegedly under the control of Chinese owners, was involved in lending money to people in India via its mobile application “CashBean”. Investigation revealed that PCFS had made payments of `429 crore to related foreign group companies under the guise of importing software licenses and services, which turned out to be fraudulent.
The investigation resulted in the seizure of various properties of PCFS held in India, totaling 252 crores, based on three seizure orders issued in 2021. The seizure orders were confirmed by the competent authority in February 2022, against which PCFS filed an appeal before the court of appeal. forum.
In February, RBI said two years ago: “PCFS was found to be charging usurious interest rates and other fees from its borrowers, besides indulging in unauthorized use of RBI logos and of CBI for collection purposes from borrowers, in violation of the Fair Practices Code. “RBI canceled the registration certificate of PCFS and barred it from operating as an NBFC.