In a recent development, India’s financial crime-fighting agency is delving into possible violations of foreign exchange rules involving platforms operated by One 97 Communications, famously known as Paytm. The Enforcement Directorate, responsible for such investigations, has discreetly sought transaction data from the central bank related to Paytm’s platforms.
While the specifics of the Foreign Exchange Management Act (FEMA) provisions under scrutiny remain undisclosed, sources confirm that the Enforcement Directorate is actively seeking information to shed light on potential irregularities.
Notably, the investigators have not yet engaged with Paytm directly, and the sources, preferring anonymity due to lack of authorization, have refrained from providing further details. Requests for comments from the Enforcement Directorate and the Ministry of Finance, overseeing the agency, have yet to receive responses.
Amidst these developments, the Reserve Bank of India has issued an order instructing Paytm Payments Bank, an affiliate of Paytm, to wind down the majority of its operations, including deposits, credit products, and its popular digital wallets, by February 29.
While there had been no prior indications of a government inquiry into potential foreign exchange rule violations by the bank or its parent company, Paytm vehemently denies the allegations. A spokesperson for Paytm refutes claims of FEMA violations as “unfounded and factually incorrect.” The spokesperson asserts that no overseas remittances can be initiated from bank accounts or wallet accounts at Paytm Payments Bank and emphasizes that payments banks are restricted from conducting outward remittances, a privilege exclusive to larger commercial banks in India.
