I-T Dept raids instant loan app company; Rs 500-cr transferred illegally

A fintech company engaged in giving instant loans through a mobile app has been found to have repatriated Rs 500 crore "non-genuine" funds overseas, the CBDT said on Wednesday.

The information was gathered by the Income Tax Department after it raided the company in Delhi and Gurgaon (Haryana) on November 9.

"During the search, it was revealed that the company has been allegedly charging very high processing fee at the time of disbursement of loans.

"This results into effective higher burden of compensation on the borrowers," the Central Board of Direct Taxes (CBDT) said in a statement.

It said the company is held by a group based in Cayman Island, ultimately "controlled by an individual of a neighbouring country."

"The company has brought in India nominal initial capital by way of Foreign Direct Investment (FDI) but took substantial working capital loans from Indian banks.

"The business model of the company results in high rotation of capital, which is evidenced by turnover of Rs 10,000 crore in its first year of operation," it said.

The CBDT, which frames policy for the department, said it was found that the company repatriated about Rs 500 crore to its overseas group companies under the pretext of buying of services in two years.

"However, evidence gathered during the search has revealed that such remittances made to the group companies are either highly inflated or non-genuine."

"Evidences found also indicate that internal web-based application for lending business was controlled from outside India," it said.

The department also recorded statements of key persons, including foreign nationals.