Paytm Payments Bank ops under ED scanner for money laundering

RBI on January 31 restrained Paytm Payment Bank from engaging in any further activities that involve accepting deposits or top-ups in any customer’s account after February 29

Paytm payment bank

Mumbai: Days after the Reserve Bank of India (RBI) restrained the Paytm Payments Bank from accepting any deposit from its account-holders, the Enforcement Directorate (ED) has served notice to its parent organisation, One97 Communication Ltd, to disclose the details of consumers, who conducted business with it.

Paytm owner Vijay Shekhar Sharma in a regulatory filing to the stock exchange stated that that the company had furnished the specific details as sought by the investigating agency—ED. “The company and its associate have continued to provide such information, documents and explanations to the authorities as is being required by them. We would also like to clarify that our associate Paytm Payments Bank Ltd does not undertake outward foreign remittance,” said the company.

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On January 31, the RBI had restrained the Paytm’s subsidiary, Paytm Payments Bank from engaging in any further activities that involve accepting deposits or top-ups in any customer’s account, prepaid instruments, FASTags, wallets, and more, post-February 29, 2024.

RBI action followed the reports of multiple repeated violations by the Paytm Payment Bank in various compliances, regulations, and directions that are in place to regulate the functioning of payment banks. The violations have been highlighted in the system audit report and compliance validation report based on which the directive was issued by the RBI.

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A senior ED official, who is among the probe team, said that they were verifying the details it has received from RBI with regard to the bank’s operation. “We will move next after conclusion of verification of documents from the RBI and counter to be provided by the Paytm,” he said, adding that the ED is yet to file an enforcement case information report (ECIR)—a formal entry of a complaint lodged by the agency.

Earlier on February 4, Paytm had denied reports of any investigation by the ED against the company, its associates or founder and chief executive Sharma for alleged money laundering.

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Based on comprehensive scrutiny audit report and subsequent compliance validation reports by external auditors, the RBI noticed that the company was indulging in persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action.

The RBI has ruled out a review of its decision in the case of Paytm Payments Bank, which has more than 300 million wallet users and over 30 million user accounts. However, customer accounts will continued to received interest payments on deposits, cashbacks or refunds.

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