Paytm crisis: Firm reacts amid reports of ED probing Paytm Payments Bank case (2024)

ByVaishnawi Sinha

Fintech company Paytm in an exchange filing clarified about the reports of an investigation by the Enforcement Directorate (ED), saying that no FEMA violation cases have been filed against the company by the probe agency.

One 97 Communications Limited, the parent company of Paytm and Paytm Payments Bank, stated in an exchange filing to NSE and BSE that its subsidiary Paytm Payments Bank “does not undertake Outward Foreign Remittances”.

The statement by the company reads, "This is to further clarify that One 97 Communications Limited ('Company"), its subsidiaries and its associate, Paytm Payments Bank Limited, have over time been receiving notices and requisition for information, documents and explanations from the authorities, including Enforcement Directorate (ED), with respect to the customers that may have done business with the respective entities, and provided the required information, documents and explanations to the Authorities."

"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 Limited does not undertake Outward Foreign Remittances. We have always made and will continue to make disclosures with our obligations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015," One97 further said.

Paytm has continually refuted all the claims of an ED case filed against the company regarding FEMA violations, terming the news reports stating the same to be entirely "baseless, misleading and malicious."

This comes just as Paytm Payments Bank is approaching its February 29 deadline imposed by the Reserve Bank of India, set to halt all transactions and deposits by merchants and customers after this day.

Paytm Payments Bank controversy

In a recent investigation, the Reserve Bank of India (RBI) uncovered that Paytm Payments Bank had violated several regulations, including the KYC rules imposed on all functioning banks in India.

As per RBI, hundreds of thousands of Paytm Payments Bank accounts have been operating without proper KYC, with certain accounts linked to just one KYC document, raising concerns about money laundering and data security.

In a detailed audit report, the RBI said that the bank was involved in grave procedural lapses and did not conduct a diligent background check of the actual source of the funds before taking on new customers.

(With inputs from ANI)