Last week, government sources informed Reuters that Paytm was under investigation under specific provisions of the Foreign Exchange Management Act (FEMA), which governs individual and corporate transfers overseas. However, Paytm denied these reports.
Troubles persist for Paytm as a case under the Foreign Exchange Management Act (FEMA) has been initiated against Paytm Payments Bank. Previously, reports indicated that the Enforcement Directorate was probing potential violations of foreign exchange rules by platforms operated by One 97 Communications, Paytm’s parent company.
Government sources informed Reuters that the fintech company was under investigation under specific provisions of the Foreign Exchange Management Act (FEMA), which encompass individual and corporate transfers overseas.
As of now, the Enforcement Directorate (ED) has not filed an enforcement case information report regarding this matter. Currently, both the ED and the Reserve Bank of India (RBI) are the only organizations investigating the issue.
Initially, Paytm denied charges that the Enforcement Directorate (ED) was investigating the firm and its unit, Paytm Payments Bank Ltd (PBBL), for violations of foreign exchange laws.
In a stock exchange filing, One97 Communications Ltd (OCL), the parent company of Paytm, stated that it denies reports of investigation or violation of Foreign Exchange rules by the company or its associate PBBL.
“One 97 Communications Limited aims to rectify recent misinformation and address factual inaccuracies and speculation. This action is taken to ensure transparency and safeguard the company’s reputation, customers, shareholders, and stakeholders from unwarranted and speculative reports. We remain committed to providing clarifications as needed,” stated OCL.
OCL reiterated, “We categorically deny any investigation by the Enforcement Directorate on OCL, our associates, and our management. Recent media reports speculating about investigations of the Company or its associate Paytm Payments Bank Limited (PPBL) for foreign exchange rule violations are baseless. Neither the Company nor PPBL are subjects of any such investigation.”
Last month, the Reserve Bank of India directed Paytm Payments Bank, the banking arm of Paytm, to cease most of its operations, including deposits, credit products, and digital wallets, by February 29. Last week, the RBI stated that these regulatory actions were taken against Paytm due to persistent non-compliance. RBI Governor Shaktikanta Das emphasized that the central bank provided ample time for Paytm Payments Bank to adhere to regulations, and business restrictions were imposed only after the regulated entity failed to heed constructive engagement efforts.
The statement reflects a responsible regulatory approach, emphasizing adequate time for compliance. Additionally, One 97 Communications’ Board formed a Group Advisory Committee, chaired by former SEBI Chairman M. Damodaran, to bolster compliance and regulatory matters.
In its statement, the company announced that the Committee includes seasoned professionals such as MM Chitale, former president of the Institute of Chartered Accountants of India (ICAI), and a former governing Council Member of the Banking Codes and Standards Board of India, nominated by the RBI.
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