The Enforcement Directorate has reportedly not yet found any breaches while investigating possible foreign exchange violations at Paytm Payments Bank.
The investigation has found some lapses related to know-your-customer (KYC) rules, a government source privy to the development told Reuters.
However, the “Enforcement Directorate has not yet detected any foreign exchange management act violations by Paytm Payments Bank,” the source was quoted as saying.
The development comes days after the ED initiated a preliminary inquiry into the operations of Paytm Payments Bank amid RBI’s clampdown on its business. The law enforcement agency also reportedly registered a case of Prevention of Money Laundering Act (FEMA) violations against the company.
Following the development, Paytm issued a statement last week stating that “Paytm Payments Bank Limited does not undertake Outward Foreign Remittance”.
Meanwhile, the fintech major clarified that it continued to furnish information, documents and explanations in response to notices issued by various authorities.
As per the news agency’s source, there were some issues with a suspicious transaction report that the bank did not generate. The regulator is reportedly still ascertaining whether to bring charges for any potential violations.
A report by The Hindu, citing sources, last week, also said that the ED found no violation in the company under the FEMA guidelines.
“If no crime is made out, there is also no generation of ‘proceeds of crime’ and so, PMLA (Prevention of Money Laundering Act) does not apply,” a source was quoted as saying.
The RBI on January 31 issued a notification, barring Paytm Payments Bank from any deposits or credit transactions, or top-ups in any of its customer accounts. The central bank also stopped the company from providing any banking services, including UPI facility and fund transfers after February 29. Since then, the company has been trying to douse many fires.
Even the shares of Paytm more than halved in the last few weeks.
However, the RBI on Friday (February 16) provided more clarity by releasing frequently asked questions (FAQs) on the matter. It also extended the deadline to March 15 from February 29.
This also brought some respite to the Paytm stock. Several brokerages have also called this a positive development. Shares of Paytm touched the upper circuit by jumping 5% to start Monday’s (February 19) trading session. The Paytm stock ended the day at INR 358.55 on the BSE.
