RBI Imposes Restrictions on Paytm Amid Compliance Concerns; ED Investigation Denied
In a recent turn of events, Paytm has publicly refuted claims of undergoing an investigation by the Enforcement Directorate (ED) on charges of money laundering. This denial follows closely on the heels of the Reserve Bank of India’s (RBI) decision to impose restrictions on Paytm, preventing the financial technology firm from acquiring new deposits or processing credit transactions post-February 29, 2024. The company took to X (formerly Twitter) to clarify its position, stating, “We deny any investigation by the ED on Paytm, our associates, or any executive regarding money laundering.”
The RBI’s stringent measures against Paytm were reportedly motivated by the discovery of multiple compliance lapses, including the creation of hundreds of accounts without proper identification. A shocking revelation was the linkage of over 1,000 user accounts to a single Permanent Account Number (PAN), raising significant concerns over the potential misuse of these accounts for money laundering purposes. The central bank’s actions reflect deep-seated worries about governance standards and the integrity of financial transactions within Paytm Payments Bank and its parent company, One97 Communications Ltd.
Further complicating matters, Revenue Secretary Sanjay Malhotra indicated in a statement to Reuters that the Enforcement Directorate would consider investigating Paytm Payments Bank if any evidence of illicit activities surfaced. Amidst reports of undisclosed major transactions and regulatory scrutiny revealing governance lapses, the fintech giant faces a critical period of rectifying its compliance practices to align with RBI directives and restore trust in its operations.
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