On Wednesday, Paytm’s parent company, One97 Communications Ltd, confirmed that it has received notices from the Enforcement Directorate (ED), seeking information on customers who have conducted business with its group companies. Vijay Shekhar Sharma, owner of Paytm, informed the stock exchanges that the necessary information and documents have been furnished to the investigating agency. This move comes after reports that the ED had initiated a probe into suspected breaches at Paytm Payments Bank following a referral from the Reserve Bank of India (RBI).
The ED is currently verifying the information it has received from the RBI, and the next step will depend on the outcome of this verification. As of now, the ED is yet to file a formal entry of a complaint. The scrutiny by the ED pertains to alleged breaches of the money laundering law and not the company law, so regulators attached to the Ministry of Corporate Affairs are not yet involved in the case.
The RBI had imposed restrictions on Paytm Payments Bank on January 31, prohibiting credit transactions, further deposits, or top-ups in customer accounts, prepaid instruments, wallets, and FASTags after February 29. The central bank cited a comprehensive system audit report and subsequent compliance validation reports by external auditors, which revealed alleged persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action.
The restrictions on deposits for customer accounts do not apply to interest payments, cashbacks or refunds, and the RBI has ruled out a review of its decision regarding Paytm Payments Bank, which has more than 300 million wallet users and over 30 million user accounts.
On February 4, Paytm denied reports of any investigation by the ED against the company, its associates, or founder and chief executive Sharma for alleged money laundering. Additionally, One 97 Communications announced the setting up of a three-member group advisory panel to look into the alleged regulatory breach.
The situation remains under scrutiny as both the RBI and ED investigate the suspected breaches at Paytm Payments Bank, with further developments expected in the coming days.
