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ED Initiates Investigation Against Paytm Payments Bank: Report

The ED has initiated its inquiry against Paytm Payments Bank after the Reserve Bank of India had written to the agency about possible violations of FEMA rules by individuals and companies.

ED Initiates Investigation Against Paytm Payments Bank: Report
Vijay Shekhar Sharma, founder and CEO of Paytm
POSTED ON February 14, 2024 4:58 PM

Investigating agency Enforcement Directorate has started an inquiry against Paytm Payments Bank, the banking arm of One97 Communication, CNBC-TV18 reported.   

According to various media reports, ED had sought additional information from the Reserve Bank of India on the alleged violation of the Foreign Exchange Management Act (FEMA) by individuals and companies using PPBL. 

The development came after RBI wrote to the agency in November informing it of the possibility of the violation. Following that, ED sought information regarding the people and companies involved in the possible breaches, Reuters had reported.  

Earlier, the company had denied reports of an ED investigation involving founder Vijay Shekhar Sharma or Paytm. It had said, “We have consistently assured that neither Paytm nor any of its associates are under investigation by any regulatory agency. This stance has been further validated by recent statements from senior government officials. Our commitment remains unwavering towards operating in compliance with regulatory guidance and continuously enhancing our processes to further the reach of digital payments across India.”   

RBI Governor Shaktikanta Das has already ruled out the possibility of any review of RBI's order directing the banking arm of the company to stop operations.    

Das had said that there is "hardly any room" to review the action taken against PPBL.   

On January 31, RBI had asked the PPBL not to take deposits/ credit transactions/top-ups in any customer accounts, prepaid instruments, wallets, FASTags, and NCMC cards, among others, after February 29.   

However, the apex bank has allowed credit of interest, cashback, or refunds even beyond February 29. 

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