ED to probe money laundering charges against Paytm Payments Bank
The Enforcement Directorate (ED) has initiated a money laundering probe against Paytm Payments Bank, according to NDTV. The case is related to "violation of foreign exchange rules." However, Paytm has denied these allegations, calling them "factually incorrect." Earlier this week, Centre also started scrutinizing foreign direct investment from China in Paytm Payments Services Ltd. (PPSL), a subsidiary of One97 Communications Ltd.
What is the case against Paytm
Paytm may have violated an RBI rule that requires prior approval for foreign investments from countries sharing a land border with India, including China and Pakistan. In November 2022, the RBI had rejected Paytm's application to operate as a payments aggregator due to FDI non-compliance. Separately, RBI has discovered instances wherein the same PAN was linked to over a thousand customers, raising money-laundering concerns.
RBI will not review its decision against Paytm Payments Bank
The ED probe initiation comes two days after RBI Governor Shaktikanta Das denied a review of the case against Paytm Payments Bank. On Monday, Das said if the RBI takes action against an entity, "we do so after careful deliberation." "But in general, when we don't see effective action being taken, we take necessary measures," Das mentioned, hinting at Paytm's persistent non-compliance.
Paytm stocks are at lowest in 52 weeks
This morning, Paytm stocks declined by another 9%, trading below Rs. 350 mark. Shares have plummeted 65.5% from their 52-week high of Rs. 998.3 in October 2023. Ever since the RBI's curbs on Paytm Payments Bank on January 31, the stock has fallen by more than 53%. In response to RBI's actions, global brokerages have cut down target prices for Paytm by 20-60%.
