RBI Takes Action Against Paytm Over Money Laundering Concerns

The Reserve Bank of India (RBI) has reportedly taken action against Paytm and its banking arm, Paytm Payments Bank Ltd (PPBL), due to concerns about money laundering and questionable transactions involving hundreds of crores of rupees. 

According to sources, the regulatory authority cited non-compliance with Know Your Customer (KYC) norms and transaction irregularities as reasons for the move.

Non-KYC Compliant Accounts and Regulatory Violations:

PPBL was found to have numerous non-KYC-compliant accounts, with instances where single Permanent Account Numbers (PANs) were used to open multiple accounts. 

Some transactions exceeded the regulatory thresholds for minimum KYC prepaid instruments, raising concerns about potential money laundering. 

Despite directives from the RBI in 2021 to rectify these issues, the non-compliance persisted, with submitted compliances deemed incomplete and inaccurate.

Paytm Operations Suspension and Customer Impact:

In response to the identified issues, the RBI has instructed PPBL to suspend various operations, including accepting additional deposits, conducting credit transactions, and performing top-ups on customer accounts, prepaid instruments, wallets, and cards after February 29. 

Existing deposits will remain accessible to customers until then, but if the RBI does not reconsider, top-ups for the Paytm wallet will cease, affecting millions of users.

ED and Government Involvement:

The RBI has expressed concerns to the Enforcement Directorate (ED), suspecting that certain accounts might have been utilized for money laundering. 

The findings have also been shared with the Ministry of Home Affairs and the Prime Minister’s Office. 

Paytm, in response, denies being the subject of the ED investigation, while a senior government official suggests a potential in-depth probe if needed.

Market Impact and Share Decline:

Due to the RBI’s directive, Paytm’s parent company, One97 Communications Ltd, witnessed a significant decline in its shares, dropping by 40 percent over the past two days. 

On Friday alone, the stock plummeted by 20 percent, reaching its daily lower trading limit on the Bombay Stock Exchange (BSE). 

The company’s market capitalization experienced a substantial reduction, falling to ₹30,931.59 crore over the two days.

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