In a significant development, the Enforcement Directorate (ED) has launched an investigation and filed a case against Paytm Payments Bank, a subsidiary of One 97 Communications, for alleged violations of the Foreign Exchange Management Act (FEMA). Two sources, cited by Reuters, reveal that both the Financial Intelligence Unit (FIU) and the ED have sought a report from the Reserve Bank of India (RBI) regarding the matter.
The central agency is examining potential breaches of foreign exchange regulations and has requested detailed information on international transactions carried out by Paytm Payments Bank. The subsidiary, however, has firmly denied any wrongdoing concerning foreign exchange regulations.
The Reserve Bank of India had previously directed Paytm Payments Bank to halt its operations by February 29 due to ongoing supervisory concerns. The recent ED investigation adds another layer of scrutiny to the financial dealings of the popular digital payments platform. The regulatory actions have had a notable impact on Paytm, with the company witnessing a significant decline in market value.
As of Wednesday, Paytm’s shares experienced a approximately 10% decrease, further intensifying concerns among investors and stakeholders. The unfolding developments underscore the challenges faced by fintech companies in navigating regulatory landscapes and maintaining compliance with financial regulations.
