The Enforcement Directorate (ED) has initiated an investigation against Paytm Payments Bank, a subsidiary of Paytm, on suspicion of violating foreign exchange rules. The ED’s probe comes in the wake of a Reuters report that highlighted concerns regarding potential breaches of foreign exchange regulations by One 97 Communications, the parent company of Paytm.
Despite the allegations, Paytm has vehemently denied any wrongdoing, describing the accusations as “unfounded and factually incorrect.” The company’s spokesperson emphasized that no overseas remittances could be conducted from bank or wallet accounts at Paytm Payments Bank.
Earlier, the Reserve Bank of India (RBI) had instructed Paytm Payments Bank to wind down a significant portion of its operations by February 29. This directive followed the ED’s collection of further details from the RBI regarding Paytm Payments Bank’s activities.
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ED has initiated an investigation against Paytm Payments Bank on violating foreign exchange rules.
The exact nature of the alleged violations of the Foreign Exchange Management Act (FEMA) was not specified in the Reuters report. Paytm Payments Bank stated that operations related to outward remittances are restricted by its license, which is exclusive to large commercial banks in India.
In a related development, RBI Governor Shaktikanta Das clarified that there would be no reconsideration of the RBI’s decision to clamp down on Paytm Payments Bank. The RBI had earlier directed Paytm Payments Bank to cease accepting deposits or top-ups in customer accounts, wallets, FASTTags, and other instruments after February 29 due to non-compliance with regulations and supervisory concerns.
