In response to recent actions by the Reserve Bank of India (RBI) barring Paytm Payments Bank Ltd from accepting deposits or top-ups in any customer account, senior executives at Paytm have been approached by the Enforcement Directorate (ED) for questioning and submission of relevant documents, news agency PTI reported quoting official sources.
The central agency is currently in the preliminary stages of examining these documents as part of a potential formal investigation under the Foreign Exchange Management Act (FEMA), prompted by alleged irregularities flagged by the RBI.
According to PTI sources familiar with the matter, Paytm executives have cooperated by providing some documents and answering inquiries, with further information requested by the authorities. However, as of now, no irregularities have been uncovered, and any potential violations of FEMA would lead to the initiation of a formal case.
Meanwhile, an ongoing investigation under the Prevention of Money Laundering Act (PMLA) involving Paytm has been noted, indicating continued scrutiny of the fintech company's operations. One97 Communications, the parent company of Paytm, acknowledged in a recent exchange filing that both it and Paytm Payments Bank have been receiving notices and information requests regarding their customers.
Regarding outward foreign remittances, Paytm Payments Bank Limited clarified that it does not engage in such transactions. The company emphasized its commitment to cooperating with authorities, stating that it has consistently provided the necessary information, documents, and explanations as requested.
Earlier this month, both the Enforcement Directorate and the Financial Intelligence Unit reportedly urged the RBI to share its report on the actions taken against Paytm Payments Bank Ltd. The RBI's directive, issued on January 31, instructed the bank to halt accepting deposits or top-ups in customer accounts and other instruments after February 29.
The ED's investigation into Paytm, along with other online payment wallets, is part of a broader probe into alleged money laundering activities involving Chinese-controlled mobile applications. Additionally, the Financial Intelligence Unit is reviewing whether Paytm and PPBL adhered to the required procedures as a "reporting entity" under the PMLA.
Section 13 of the PMLA mandates financial institutions to furnish transaction details, identity documents of clients and beneficial owners, as well as account records and business correspondence to the FIU. These developments underscore the growing regulatory scrutiny faced by fintech companies operating in India's digital payment ecosystem.
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