On Wednesday, NBFCs and various fintech companies generated proceeds of crime worth more than Rs 940 crore by indulging and violating RBI guidelines while operating in India, said the Enforcement Directorate (ED).

The federal probe agency has approached companies that were “operating based on instructions from Chinese, Hong Kong persons.”

Recently, the ED has attached Rs 86.65 crore worth of funds in a total of 155 banks and payment gateway accounts of NBFC, such as Kudos Finance and Investments Private Limited, Rhino Finance Private Limited, Acemoney (India) Limited and Pioneer Financial and Management Services Private Limited.

For carring out the attachments, a provisional order was issued under the criminal sections of the Prevention of Money Laundering Act (PMLA), ED said.

“ED has been conducting money laundering investigations against several NBFC companies which are in the business of instant personal micro loans. It was found that various fintech (financial technology) companies backed by Chinese funds have made agreements with these NBFC companies for providing instant personal loans of terms ranging from 7-30 days,” the agency said in a statement.

According to ED, the fintech companies brought the funds to be lent to the public and did MoU (memorandum of understanding) with “defunct” NBFCs for their lending licence.

“Since the fintech companies were unlikely to get a fresh NBFC license from the RBI, they devised the MoU route with defunct NBFCs as a via media to do large-scale lending activities,” the ED found.