Paytm Payments Bank Does Not Undertake Foreign Remittances: Paytm On Report Of FEMA Violations

Responding to reports of the Enforcement Directorate (ED) registering a case of forex violations against Paytm Payments Bank, Paytm on Wednesday (February 14) said its banking unit does not undertake outward foreign remittances.

“We would also like to clarify that our associate Paytm Payments Bank Limited does not undertake Outward Foreign Remittance,” the company said in an exchange filing.

The statement came hours after the BSE sought a clarification on recent media reports that suggested that the ED has registered a case of FEMA violations against Paytm Payments Bank.

Paytm, in its filing, also said that it continues to furnish information, documents and explanations in response to notices issued by various authorities. 

“… this is to further clarify that One 97 Communications, its subsidiaries and its associate, Paytm Payments Bank, have over time been receiving notices and requisition for information, documents and explanations from the authorities… The company and its associate(s) have continued to provide such information, documents and explanations to the authorities as is being required by them,” it said. 

Earlier in the day, Reuters reported that the ED had sought information on the past overseas transactions undertaken by Paytm Payments Bank as part of a preliminary examination. 

It also said that the ED had raised concerns over high-value transactions, spanning multiple accounts, that were undertaken on the platform without adequate verification. The report also said that the agency was also probing the use of third-party platforms to transfer funds overseas from Paytm platforms.

A source reportedly said that the RBI had flagged frequent intra-day transactions by Paytm Payments Bank accounts, adding up to large volumes. Despite the large payments, these accounts closed the day within the mandated INR 2 Lakh deposit threshold, the report said. 

Paytm was thrusted in uncharted waters after the RBI barred the payments bank from undertaking any deposits or credit transactions, or top-ups in any of its customer accounts. It also banned Paytm Payments Bank from processing other banking services such as UPI facilities and funds transfers post February 29, 2024.

While Paytm CEO Vijay Shekhar Sharma held separate meetings with the officials of the central bank and finance minister Nirmala Sitharaman on the issue, the company has not been able to get any respite on the regulatory front.

As if this was not enough, the central bank has also reportedly directed the ED to check for suspected breaches at Paytm Payments Bank. In the middle of all this, Paytm’s shares nosedived to a record low of INR 342.4 on the BSE on February 14.

The company’s stock has been on a free fall following the RBI’s action on its payments bank and has tanked more than 50% in the last two weeks.

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