New Delhi: Paytm Payments Bank has come under intense regulatory scrutiny, with the Reserve Bank of India (RBI) imposing strict measures due to concerns over numerous accounts created without proper identification. Insiders familiar with the situation disclosed that these accounts, lacking adequate Know-Your-Customer (KYC) procedures, engaged in transactions of significant amounts on the platform, prompting worries about potential money laundering.
A concerning discovery revealed that over 1,000 users had linked the same Permanent Account Number (PAN) to their accounts. Both the RBI and auditors, during verification processes, identified discrepancies in the compliance submitted by the bank.
The RBI is reportedly alarmed that some of these accounts may have been utilized for money laundering activities. Consequently, the findings have been shared not only with the Enforcement Directorate but also with the Ministry of Home Affairs and the Prime Minister’s Office for further investigation.
Emphasizing the gravity of the situation, Revenue Secretary Sanjay Malhotra stated that the Enforcement Directorate would initiate a probe into Paytm Payments Bank if evidence of illegal activity is uncovered.
Additional concerns surfaced regarding the non-disclosure of significant transactions within the group and associated parties, intensifying regulatory apprehensions. The RBI’s scrutiny also highlighted governance standard loopholes, particularly in the relationship between Paytm Payments Bank and its parent company, One97 Communications Ltd.
Furthermore, the routing of transactions through the parent app of Paytm raised data privacy concerns, leading to the RBI’s decision to halt transactions through Paytm Payments Bank. While user deposits in savings accounts, wallets, FASTags, and NCMC accounts are not immediately affected, the company will have to rely on third-party banks for its operations until February 29.
In response to the RBI’s actions, Paytm’s stock experienced a sharp decline, plummeting 36% over two days and wiping $2 billion from its market value. Paytm founder Vijay Shekhar Sharma downplayed the regulatory actions as a ‘speed bump’ during a conference call with analysts, aiming to reassure stakeholders amidst the ongoing turbulence.”