More than 100 fintech cos under ED scanner

The central agency has frozen bank accounts of these startups without giving any reason

The Enforcement Directorate Hyderabad branch has instructed banks to freeze accounts of more than 100 fintech firms without giving any reason, pushing some of the companies to the brink of closure, according to a report in Mint.

The founder of a fintech company among the 100 said that he only came to know of his accounts being frozen from his payment gateway and bank partners. "We got an email from them saying that ‘we are proactively freezing this particular bank account till we get further notice’. The email also said that our account will remain frozen for a maximum of 60 days and will be automatically released after that period," he told the publication.

He added that all the banks said was that the notice came from ED and that they have no further information.

Sources told the publication that many legitimate startups including Pagarbook, Kredily, Pocketly and Krazybee are under ED's scanner. An official said that around 20 companies have been given relief in the matter.

The aforementioned founder was also summoned by the ED and asked about lending, net worth, investor details etc. Their accounts were frozen a few days after this.

“I think they broadly want to know whether are you lending Chinese money or if you have any Chinese connection," he is quoted as saying.

In the past two years, the ED has focussed on loan apps on charges of Foreign Exchange Management Act (FEMA) and Prevention of Money Laundering Act (PMLA) violations.