PC Financial Services Pvt Ltd, a non-banking financial organisation which is being investigated by the Enforcement Directorate (ED) for their alleged link with a Chinese national, on Wednesday said that they would be out of this situation very soon. It also said they are responding to all scrutiny with forthrightness.
The ED recently initiated a probe under the Foreign Exchange Management Act (FEMA) against PC Financial Services Pvt Ltd (PCFS), which provides instant personal micro loans through its mobile application ‘Cashbean’.
According to ED, the original Indian Company, PCFS, was incorporated in 1995 by Indian nationals. It got an NBFC license in 2002. After RBI approval in 2018, the ownership moved to a Chinese-controlled company.
READ: ED attaches assets worth Rs 76 Crore in Chinese loan app scam
“PCFS is a wholly owned subsidiary of Oplay Digital Services, SA de CV, Mexico, which is in turn a subsidiary of Tenspot Pesa Ltd, Hong Kong, which is owned by Opera Ltd (Cayman Islands) and Wisdom Connection I Holding Inc (Cayman Islands), which are ultimately beneficially owned by Chinese national Zhou Yahui,” ED had said in a statement.
Contrary to the claims by the ED, Raghuvir Gakhar, Chief Executive Officer of CashBean (PC Financials Services Pvt Ltd) in a statement to India Today said, “PCFS (CashBean), is and always has been a registered NBFC under the monitoring and regulatory oversight of the Reserve Bank of India. The Company (PCF) takes compliance as first priority and we have tried our best to follow all laws, regulations, norms and conditions; we will keep practicing so as we do believe that only strict compliance can help us move further.”
The financial probe agency claims that their investigation has revealed that the foreign parent companies of PCFS brought in foreign direct investment worth Rs 173 crore for the lending business. Within a short span of time, they allegedly made foreign outward remittances worth Rs 429.29 crore in the name of payments for software services received from related foreign companies. PCFS also showed high domestic expenditure of Rs 941 crore.
The ED claims its investigation into the foreign expenses of PCFS revealed that most of the payments were made to foreign companies which are related to and owned by the same Chinese nationals who own the Opera Group.
On the allegations levelled against the firm, Raghuvir Gakhar said, “We would like to say that we have kept complete transparency in all our communications done with all esteemed authorities. We will continue to operate within the revered ambit of the law with the utmost dedication, as we have been doing. PCF would be responding to all scrutiny with forthrightness. Given its understanding of the digital lending industry, the company strongly believes that it must, at all times, adhere to the highest standards of integrity.
The ED has also alleged that all foreign service providers of PCFS were chosen by the Chinese owners and the price of the services was also fixed by them. The ED allegedly found that exorbitant payments were blindly allowed by the dummy Indian directors of PCFS without any due diligence and on the instructions of the country head Zhang Hong, who directly reported to Zhou Yahui, a resident of China.
Responding further to the allegations, Raghuvir Gakhar further said, “Since the commencement of operations, PCF has set a vision for long-term business operations. PCF has and will continue to invest and contribute towards our community, while also fulfilling the company’s social responsibilities. PCF will continue to fully cooperate with the judicial process and emerge out of this situation.”
The ED recently seized over Rs 236 crore of the firm in this case.
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