RBI Intensifies Scrutiny on Banks Post-Paytm Payments Bank Lapses
In the wake of the Reserve Bank of India’s (RBI) recent crackdown on Paytm Payments Bank for regulatory failures, the Financial Intelligence Unit (FIU) has identified approximately 50,000 bank accounts across various banks lacking proper Know Your Customer (KYC) documentation, raising alarms over potential money laundering activities. According to a report by The Economic Times, this discovery has put several banks under the RBI’s scanner for compliance with regulatory norms aimed at curbing money laundering. Among these accounts, 30,000 were linked to Paytm Payments Bank, with the remaining accounts now subject to further investigation.
The FIU’s findings have prompted the RBI to demand a more detailed report on these discrepancies, with the initial probe highlighting major lapses in monitoring suspicious transactions, discrepancies in KYC documents, and instances of multiple accounts being registered under a single PAN number. A senior government officer revealed to ET that out of 175,000 non-compliant accounts, 50,000 were engaged in suspicious activities indicative of money laundering, leading to an intensified scrutiny of payment banks under the Prevention of Money Laundering Act (PMLA).
In response to the FIU’s report, the RBI mandated Paytm Payments Bank to halt all transactions and deposits by the end of February, following the discovery of significant regulatory lapses. This action forms part of a broader investigation that includes the probe into the Mahadev app scam, which identified around 10,000 UPI accounts registered with Paytm used for illicit money transfers. Despite the controversy, Paytm’s parent company, One 97 Communications, has refuted claims of any Enforcement Directorate (ED) probe against them for money laundering or FEMA violations, dismissing such reports as baseless.
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