Charges Against Paytm Payments Bank To Be Probed By Enforcement Directorate

The Enforcement Directorate has launched a money laundering probe against digital payments Paytm Payments Bank Ltd, sources told NDTV Wednesday afternoon. The firm also faces scrutiny over alleged violation of foreign exchange rules; Paytm has called these claims "factually incorrect".

The investigation will add to Paytm CEO Vijay Shekhar Sharma's headaches after the Reserve Bank of India last month barred PBBL from credit transactions across most of its services, effectively shutting down most of its operations, including its popular digital wallet, citing "persistent non-compliance".

In addition, nodal accounts of parent company, One97 Communications Ltd., and Paytm Payments Bank Ltd., or PBBL, were terminated. Customers can, however, continue to utilise account balances, including savings and current, "without restriction (and) up to available limit", the RBI order said.

NDTV Explains | Why Has RBI Put Restrictions On Paytm Payments Bank?

The central bank cited "persistent non-compliances and continued material supervisory concerns in the bank" that were flagged after a comprehensive audit of its systems by external parties.

The Paytm bank is a regulated entity that accepts the deposits from users who can then use the app to make transactions, including sending and receiving money, and buying goods and services.

How Paytm Bank Came Under RBI's Radar

Hundreds of accounts created without proper identification were one of the major reasons for the RBI's action, sources told NDTV last week. These accounts - with inadequate Know-Your-Customer, or KYC - conducted transactions worth crores on the platform, leading to fears of potential money laundering.

In fact, over 1,000 users were found to have linked the same Permanent Account Number, or PAN, to their accounts. These were found during verification conducted by the RBI and external auditors.

READ | 1,000 Accounts, 1 PAN: How Paytm Bank Came On RBI Radar

Paytm Stock Nosedives

Since January 31, Paytm stock has lost over 60 per cent of its value, eroding an estimated $2.6 billion of shareholders' wealth. At 1.30 pm it was trading 9.29 per cent down for the day.

Paytm Reaches Out To Government

Mr Sharma has met Finance Minister Nirmala Sitharaman in efforts to shake off the restrictions and return to normal service, but with no success so far. RBI Governor Shaktikanta Das last week said action was taken "... in the best interest of systemic stability (and) protection of customers' interest".

On Monday Mr Das said the RBI would not review its recent regulatory order on Paytm.

READ | What RBI Governor Said On Strict Action On Paytm Payments Bank

The government told Mr Sharma it will not interfere. Sources said in a 10-minute meeting with Ms Sitharaman, the Paytm CEO was told to sort the issue out with the RBI and to comply with guidelines

READ | What Government Told Paytm CEO In Meeting On RBI Clampdown

What Paytm Has Said And Done

Paytm has said it will form an "advisory committee" on compliance and regulatory matters, which will be led by M Damodaran, the former Chairman of the Securities and Exchange Board.

READ | "PaytmKaro...": Founder Vijay Shekhar Sharma On RBI Order Concern

PBBL has assured customers their money is "safe", but confirmed they will not be able to deposit money in accounts or wallets after February 29. The app, though, will work as usual, Mr Sharma said.

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