ED Likely To Investigate Paytm Over Non-Compliances: Report

While Paytm isn’t currently being investigated by the ED, there are now reports that such an investigation could be in the offing.

The Directorate of Enforcement (ED) is likely to initiate a formal probe into Paytm to investigate issues flagged by the Reserve Bank of India (RBI), ET reports. A comprehensive investigation could be initiated in view of the reference after ascertaining relevant details, the report added.

It had previously been reported that Paytm Payments Bank had inadequate KYC (Know Your Customer) compliances, which led to over a thousand accounts at the bank being linked to the same PAN card. These customers had conducted hundreds of crores of transactions, which led to money laundering concerns for the banking regulator.

Amid these rumours, Paytm CEO Vijay Shekhar Sharma met India’s Finance Minister Nirmala Sitharaman yesterday. As per reports, Sharma explained the company’s position on the issues flagged by the RBI to the Minister. The Minister reportedly told Sharma to sort out the non-compliances. Sharma had also met RBI executives on Monday, and had sought an extension of the 29th February deadline that had been imposed by the central bank. Sharma also proposed a transition plan, and said that the company was making efforts to comply with the norms.

However, Moneycontrol reported that RBI had refused to give Paytm any concessions, and refused to help them out in any manner. RBI was also unwilling to help with the migration of accounts to other banks or extending the deadline beyond February 29. “Sharma was told that Paytm Payments Bank has to speak with banks and National Payments Corporation of India (NPCI), which runs the popular mobile payments platform Unified Payments Interface (UPI), on its own and the RBI will not nudge banks to take this up,” a source said.

Two days ago, Paytm had maintained there are no ongoing ED probes into the company or founder Vijay Shekhar Sharma. “We must clarify that reports suggesting an impending probe into Paytm or its associate Paytm Payments Bank by the Enforcement Directorate, based on an RBI report, are factually incorrect and without foundation,” a company spokesperson had said.

Paytm’s shares, meanwhile, have risen for two consecutive days after hitting the lower circuit for three straight trading sessions. Paytm’s shares rose 3 percent on Tuesday, and rose 10 percent today, hitting the upper circuit. Paytm, though, is still trading significantly below the levels before the RBI had imposed curbs on its Payments Bank. And given how ED could soon investigate the company, and RBI has refused to help out, there could be more trouble on the horizon for the beleaguered financial services player.