SUMMARY
As of Monday, the ED has initiated a preliminary inquiry into the operations of the company
However, it has not yet filed an enforcement case information report
At present, the ED and the RBI are the sole agencies investigating the matter
Amid the ongoing crisis at Paytm, the Reserve Bank of India (RBI) has reportedly asked Directorate of Enforcement (ED) to check for suspected breaches at the fintech major’s banking unit Paytm Payments Bank.
As of Monday, the ED has initiated a preliminary inquiry into the operations of the company. However, it has not yet filed an enforcement case information report, Mint reported.
Currently, the ED and the RBI are the sole agencies investigating the matter. If additional assistance from other agencies is deemed necessary, the latter has the authority to request it. However, there will be no interference from the government in this process.
“This is a regulator’s job and they are up to it. RBI has taken action in customer interest. ED has also sought documents on Paytm from RBI and is studying it for any violations. There is a mechanism of sharing of information among regulators, and information (on Paytm Payments Bank) has already been shared and different agencies are examining them,” an official said as quoted in the report.
Paytm said that the company is committed to cooperating with regulatory authorities and will comply with requests for information regarding One97 Communications Ltd and its associate, Paytm Payments Bank.
“We may be asked to furnish information and explanations by different regulatory and law enforcement authorities, including ED, and we have always complied with the requirements dutifully by furnishing the requisite information and explanation,” Paytm said.
The RBI on January 31 barred Paytm Payments Bank from taking deposits, credits, or processing top-up transactions in its customer accounts for ‘persistent non-compliances’. The bank has also been barred from processing other banking services like UPI facilities and funds transfer from February 29.
Meanwhile, the central bank’s governor Shaktikanta Das on Monday said there is “hardly any room” to review the action on the payments bank.
“The decisions taken by the Reserve Bank are after due thought process…be it a bank, payment bank or cooperative bank. If we are taking action against somebody, not specifically talking about Paytm, but in general, we interact for months and years…There is hardly any room for review,” he said.
Das said the central bank provided Paytm Payments Bank one month’s time so that customers are not inconvenienced.
Paytm shares hit a fresh record low at INR 342.4 on the BSE during the early trading hours on Wednesday (February 14), slumping almost 10% once again.
Macquarie downgraded One97 Communications to ‘underperform’ from an earlier ‘neutral’ rating and lowered its price target (PT) to INR 275 from INR 650. The brokerage’s current target implies a downside of 27.7% to the stock’s last close.
