Paytm and its banking arm Paytm Funds Financial institution Ltd (PPBL) had questionable dealings of a whole lot of crores of rupees, prompting RBI to crack down on the corporate. Following this the shares of One97 Communications Ltd, which owns Paytm model, plunged 40 per cent within the first two days of February.
The apex financial institution has ordered PPBL to cease accepting additional deposits or top-ups on buyer accounts, wallets, FASTags and pay as you go devices in addition to conducting additional credit score transactions after February 29.
Nonetheless, prospects can entry their present deposits and pay for providers with cash saved of their wallets until February 29.
What led to RBI curbs on Paytm Financial institution?
There have been lakhs of accounts that flouted KYC (Know Your Buyer) norms and in hundreds of situations, single PANs had been used for opening a number of accounts, PTI quoted sources as saying.
One other main concern was potential cash laundering as there have been circumstances the place the whole worth of transactions bumped into crores of rupees. That is past regulatory limits in minimal KYC pre-paid devices.
An “unusually” excessive variety of dormant e-wallet accounts had been reportedly discovered within the financial institution.
The RBI has despatched its findings to the Enforcement Directorate, the Ministry of Dwelling Affairs and the Prime Minister’s Workplace.
A Paytm spokesperson stated, “One 97 Communications Ltd. and Paytm Funds Financial institution have by no means been probed by the Enforcement Directorate. Some retailers utilizing our platforms have been the topic of investigations and we reply authorities on this similar as and when requested. We strongly refute cash laundering allegations and warning you towards hypothesis.”
The ED is predicted to analyze the cash laundering angle or some other criminality.
RBI’s first warning got here in 2021
The RBI had in 2021 reportedly directed PPBL to handle anti-money laundering violations. Nonetheless, norms continued to be flouted with the compliances submitted by the financial institution typically discovered to be incomplete or false, based on sources.
In March 2022, the central financial institution imposed supervisory restriction on PPBL to cease on-boarding new prospects. It additionally directed to financial institution to nominate an exterior agency to conduct a complete audit.
