India’s central bank has uncovered a significant number of accounts at Paytm Payments Bank that were established without proper identification, according to three sources familiar with the matter. The Reserve Bank of India (RBI) has relayed this information to the country’s financial crime fighting agency, expressing concerns over potential money laundering activities associated with some of these accounts.
The sources, speaking on condition of anonymity, revealed that the RBI has not only alerted the Enforcement Directorate but has also forwarded its findings to the Ministry of Home Affairs and the Prime Minister’s Office.
Responding to these revelations, a spokesperson for Paytm Payments Bank’s parent company, One 97 Communications Ltd., emphasized that neither entity has been subject to investigation by the Enforcement Directorate. However, the spokesperson acknowledged that certain merchants using their platforms have come under scrutiny, reiterating their willingness to cooperate with authorities and dismissing allegations of money laundering.
Despite repeated attempts to solicit comments from the RBI, the Enforcement Directorate, Ministry of Finance, Ministry of Home Affairs, and the Prime Minister’s Office, there has been no response outside of regular office hours.
In response to the situation, the RBI issued an order on Wednesday instructing Paytm Payments Bank to wind down the majority of its operations, including deposits, credit products, and its popular wallet, by February 29. The central bank cited “persistent non-compliances and continued material supervisory concerns in the bank” as reasons for its action, although specific details were not provided.
Revenue Secretary Sanjay Malhotra affirmed that the Enforcement Directorate would launch an investigation into Paytm Payments Bank if evidence of illicit activities emerged. This statement came in the wake of a 36% decline in Paytm’s stock over two days following the RBI’s regulatory action, resulting in a $2 billion reduction in its market value.
During a conference call with analysts on Thursday, Paytm’s founder Vijay Shekhar Sharma downplayed the RBI’s measures, characterizing them as a temporary “speed bump” in the company’s trajectory.
According to two of the sources, numerous accounts at Paytm Payments Bank were associated with identical identification documents, with transactions in these accounts amounting to millions of rupees. Additionally, an unusually high number of dormant accounts were discovered, suggesting potential irregularities within the bank’s operations.
