- ByStartupStory | February 15, 2024
One97 Communications Limited stated on Wednesday that authorities, including the Enforcement Directorate (ED), have requested Paytm Payments Bank Limited for information regarding transactions, and the company is fulfilling these requests by providing necessary information, documents, and explanations regarding customers who have conducted business with the company.
“One 97 Communications Limited, 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 said in a statement to the stock exchanges.
This comes after Reuters reported that Paytm Payments Bank is under investigation by the financial crime agency for potentially violating foreign exchange rules. However, the company clarified that Paytm Payments Bank (PPBL) Limited does not engage in outward foreign remittances. Reuters quoted a source as saying that the ongoing probe is a preliminary examination. The financial crimes agency had earlier sought information from the Reserve Bank of India (RBI) regarding the beleaguered payments bank.
Queries sent to Paytm remained unanswered at the time of writing this article. Last week, the Press Trust of India reported that the Indian government is scrutinizing foreign direct investment (FDI) from China into Paytm Payments Services Ltd (PPSL), another subsidiary of One97 Communications Ltd. PPSL reportedly has investments from the Chinese firm Ant Group Co.
PPSL sought a license from the Reserve Bank of India (RBI) in November 2020 to operate as a payment aggregator. However, in November 2022, the RBI rejected PPSL’s application and instructed the company to reapply to comply with Press Note 3 under FDI rules. Consequently, the company applied to the Indian government in December 2022 to report previous investments from One97 Communications Ltd as per the requirements of Press Note 3.
An inter-ministerial committee is currently reviewing investments from China in PPSL. Press Note 3 mandates prior approval from the government for foreign investments in any sector from countries that share a land border with India, aimed at preventing opportunistic takeovers of domestic firms following the COVID-19 pandemic.
