Tuesday, March 5, 2024
Tuesday, March 5, 2024
HomeBusinessPaytm Bank gets knock on ED door

Paytm Bank gets knock on ED door

India’s top economic intelligence agency, the Enforcement Directorate (ED), has been roped in to check for suspected violations at Paytm Payments Bank based on a reference from the Reserve Bank of India (RBI), they said. two officials aware of the development.

The ED, which investigates money laundering and foreign exchange violations, has launched a preliminary probe into the company’s affairs. An information report on the law enforcement case had not yet been filed as of Monday, one of the two officials cited above said.

For now, the ED and the Reserve Bank of India (RBI) are the only agencies investigating the issue. If assistance from any other agency is required, the RBI can ask for it, but the government will not interfere, the person said. “The Department of Education’s investigation aims to find the facts about the concerns raised by the RBI and address any shortcomings. “There is no witch hunt,” the person added.

The second official cited above said that non-compliance is a matter dealt with directly by sector regulators, not the government. “This is the job of a regulator and they are up to the task. RBI has taken steps in the interest of customers. ED has also requested documents on Paytm from the RBI and is studying them to detect any violations. “There is a mechanism for sharing information between regulators, and the information (about Paytm Payments Bank) has already been shared and is being examined by different agencies,” the person said.

Queries emailed on Tuesday to spokespersons for the finance and corporate affairs ministries and the RBI did not elicit a response till the time of going to press.

A Paytm spokesperson responded to a Mint question by saying the company will comply with information requests from regulators on matters related to One97 Communications Ltd and its associate, Paytm Payments Bank.

“We may be asked by different regulatory and law enforcement authorities, including the Department of Education, to provide information and explanations, and we have always diligently complied with the requirements by providing the required information and explanations,” the spokesperson said.

On January 31, the RBI had restricted Paytm Payments Bank from carrying out credit transactions or making further deposits or recharges to customer accounts, prepaid instruments, wallets and FASTags after February 29.

The central bank had noted that a comprehensive system audit report and a subsequent compliance validation report by external auditors had revealed alleged “persistent non-compliance and continuing significant supervisory concerns at the bank, warranting further supervisory measures.”

Restrictions on deposits to customer accounts do not apply to interest, refunds or refunds, which may be credited at any time.

The RBI has already ruled out a review of its decision in the Paytm Payments Bank case. The second person cited above said the RBI will explore further regulatory options after February 29. Paytm Payments Bank has over 300 million wallet users and over 30 million accounts.

Experts said compliance and corporate governance around startups are becoming an important issue for the government to address as the country now hosts the world’s third-largest startup ecosystem.

“Many companies are good at presenting ideas and promoting creativity and innovation, but unless they educate themselves on governance principles, the roles and responsibilities of directors and legal requirements, they will end up getting into trouble,” he said. Manoj Raut, CEO. and general secretary of the Institute of Directors, India’s premier directors’ association: “A person can be a good driver, but if the rules of the road are not followed, there will be consequences. India is a growing economy and investments of capital are growing, but their sustainability will depend on corporate governance.

One 97 Communications, a minority shareholder in Paytm Payments Bank, had on February 9 announced the creation of a three-member advisory group headed by former Securities and Exchange Board of India chairman M. Damodaran and comprising M.M. Chitale, former president of the Institute. of Chartered Accountants of India and R. Ramachandran, former Chairman and Managing Director of Andhra Bank.

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