The Enforcement Directorate’s latest action deals a new blow to the Payments Payments Back, coming on the heels of the RBI’s firm stance against reconsidering its regulatory measures targeting the entity.
According to a CNBC TV18 report cited by Reuters, the Enforcement Directorate launched a preliminary inquiry into Paytm Payments Bank on Wednesday. This move follows closely on the heels of the Reserve Bank of India (RBI)’s recent decision to prohibit the Paytm subsidiary from accepting new deposits starting February 29.
The recent action by the central agency serves as another setback for the Payments Bank, particularly following the RBI’s firm stance against reconsidering its regulatory measures targeting the entity. RBI Governor Shaktikanta Das stated, “At the moment, let me say very clearly there is no review of this (PPBL) decision. If you are expecting a review of the decision, let me very clearly say there is going to be no review of the decision.”
Paytm informed CNBC-TV18 that they have consistently adhered to all regulatory requirements. However, the report did not provide any additional details regarding the ongoing probe.
Last week, Reuters reported that the Enforcement Directorate (ED) was investigating potential Foreign Exchange Management Act (FEMA) violations involving Paytm and its Payments Bank.
The fintech major has refuted reports suggesting that either the company or its founder, Vijay Shekhar Sharma, is under investigation by the agency. In a statement, the company emphasized its commitment to compliance with regulatory requirements and stated, “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.”
Last week, amid the crisis facing the Payments Bank, Vijay Shekhar Sharma, the CEO of Paytm, held meetings with both the Reserve Bank of India (RBI) and Finance Minister Nirmala Sitharaman. Reports suggest that during the meeting, the minister conveyed to the Paytm CEO that the RBI’s action against the company was a regulatory exercise, and the government cannot intervene to assist the company. Furthermore, even the central bank declined to grant concessions to the Payments Bank.
“Last week, Das emphasized, “We give sufficient time to every entity to comply and sometimes more than sufficient time to the entities for compliance. If they would comply, why would a regulator like us would have to take action?” This statement underscores the regulatory perspective regarding compliance and the necessity for entities to adhere to regulatory requirements.”
Disclaimer: The information provided herein is for informational purposes only and does not constitute financial advice, investment recommendations, or an offer to buy or sell securities. While efforts have been made to ensure the accuracy and reliability of the information, it should not be relied upon as such. Any action taken upon the information presented is at your own risk, and we recommend consulting with a qualified financial advisor or conducting thorough research before making any investment decisions. We do not assume any liability for any loss or damage arising from the use of this information.