Paytm crisis: ED questions officials of Paytm Payments Bank over alleged FEMA violations

Paytm crisis: The Enforcement Directorate (ED) reportedly quizzed officials of the fintech’s payments arm, Paytm Payments Bank, this week in connection with alleged Foreign Exchange Management Act (FEMA) violations. The company executives provided information and documents to the agency in connection with the probe.

According to a report in The Economic Times, the executives have been asked to provide further details. A top government official told the financial daily that prima facie it does not look like Paytm violated FEMA norms so far.

The government official further said that as part of the procedure once a FEMA investigation is launched, the executive had to be summoned. The official highlighted certain procedural deficiencies by Paytm that can only be dealt with by the RBI. He said that certain KYC non-compliances were found that can only be penalised by the RBI and not the ED.

The Paytm executives were quizzed a day after the agency officials met RBI officials for “requisite information” on the entities that they believe violated FEMA norms. 

Paytm parent, One97 Communications, had meanwhile, said in a filing on Wednesday: “This is to further clarify that One 97 Communications Limited (‘Company”), its subsidiaries and its associate, Paytm Payments Bank Limited, have over time been receiving notices and requisition for information, documents and explanations from the Authorities, including Enforcement Directorate (ED), with respect to the customers that may have done business with the respective entities, and provided the required information, documents and explanations to the Authorities. The Company and its associate have continued to provide such information, documents and explanations to the Authorities as is being required by them. We would also like to clarify that our associate Paytm Payments Bank Limited does not undertake Outward Foreign Remittance.” 

Paytm shares closed 10 per cent lower at Rs 342.35 on Wednesday. The Paytm stock has lost 55 per cent of its market value since January 31, the day RBI put strict restrictions on Paytm Payments Bank.

Also read: Paytm shares in news after clarification on ED case; stock down 55% since Jan 31