RBI Investigates
The central bank and auditors found Paytm Payments Bank’s compliance inaccurate during verification.
Paytm crisis: The RBI restricted Paytm Payments due to hundreds of fake accounts. According to reports, these accounts without KYC details made crores in platform transactions, raising money laundering worries, NDTV reported.
More than 1,000 people linked their accounts to the same PAN. Sources reported a “unusually” large number of dormant accounts.
The central bank and auditors found Paytm Payments Bank’s compliance inaccurate during verification. Besides the Enforcement Directorate, the central bank has informed the ministry of home affairs and the prime minister’s office.
Undisclosed big group and connected party transactions have raised regulatory concerns. The RBI also observed governance concerns, particularly between Paytm Payments Bank and One97 Communications Ltd.
“One 97 Communications Ltd. and Paytm Payments Bank have never been investigated by the Enforcement Directorate,” a spokeswoman stated.
“When asked, we cooperate with authorities investigating merchants on our platforms. We vehemently deny money laundering charges and advise against speculation “added the spokeswoman.
Paytm Payments Bank transactions were temporarily halted due to data privacy concerns. The bank will use third-party banks until February 29.
Following the RBI’s notification, the company’s stock fell 10% on Tuesday morning to 48% in four days.
Paytm’s founder, Vijay Shekhar Sharma, called the regulatory proceedings a’speed bump’ on a conference call with analysts to calm stakeholders.
Startup founders petitioned RBI governor Shaktikanta Das and finance minister Nirmala Sitharaman to review RBI’s move against Paytm’s payments bank business. They recommended RBI to reconsider Paytm’s “proportionality of restrictions” given its influence on the payments bank, technology ecosystem, and economy.
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