Everything you should know about ED’s investigation into Paytm Payments Bank

The Indian fintech company, Paytm, is under further investigation as the Enforcement Directorate (ED) has initiated a preliminary inquiry against Paytm Payments Bank, as reported by Reuters, citing sources.
Owned by One 97 Communications, the payments bank has recently faced strict actions from the Reserve Bank of India (RBI), which ordered the bank to halt its services by February 29.

The investigation was launched on suspicion of violation of foreign exchange rules by Paytm Payments Bank. It was reported by Reuters earlier in the month that the ED has initiated a probe into One 97 Communications for alleged violations of foreign exchange rules. Paytm, however, has denied the allegations. The exact reason and specific provisions of the Foreign Exchange Management Act (FEMA) were not mentioned in the report.

A Paytm spokesperson has vehemently denied any speculations on alleged FEMA violations by One 97 Communications or its associate Paytm Payments Bank. The spokesperson clarified that no overseas remittances of any kind could be performed from bank accounts or wallet accounts at Paytm Payments Bank.

Furthermore, following the RBI order to stop accepting deposits or top-ups in customer accounts by Paytm Payments Bank after February 29, the RBI Governor Shaktikanta Das clarified that there will be no review of the decision. In response to the allegations and reports of ED investigations, Paytm has reiterated its compliance with the restrictions imposed by the license for payments banks, which restrict them from conducting operations related to outward remittances.

As of now, there has been no official statement by Paytm or the ED regarding the ongoing media reports of the preliminary investigation by the agency. The probe into the alleged FEMA violations against the Indian fintech company continues, as it faces scrutiny from the financial crime-fighting agency.