Paytm Crisis : FEMA Case Initiated Against Paytm Payments Bank

Paytm Crisis : FEMA Case Initiated Against Paytm Payments Bank

A case under the Foreign Exchange Management Act (FEMA) has been started against Paytm on charges against Paytm Payments Bank. Prior, it was reported that the Enforcement Directorate was researching assuming stages show to One 97 Correspondences were engaged with infringement of unfamiliar trade rules.

According to government officials who spoke to Reuters, the fintech was the subject of an investigation under certain sections of the Foreign Exchange Management Act (FEMA), which deals with international transactions for both individuals and corporations. In this respect, the Enforcement Case Information Report has not been filed by the ED. At present, the only agencies investigating the matter are the Reserve Bank of India (RBI) and the Economic Department (ED).

At the beginning, Paytm has refuted claims made by the ED that it was looking into potential foreign exchange law violations at Paytm Payments Bank Ltd (PBBL), a division of the company. The parent company of Paytm, One97 Communications Ltd (OCL), stated in a stock exchange filing that it rejects any reports of an investigation or a breach of foreign exchange regulations by the company or any of its affiliated PBBLs.

One 97 Communications Limited would want to clarify the company’s stance and directly address rumors in the recent false media stories regarding the company in order to correct recent disinformation, factual errors, and conjecture. Transparency and safeguarding our brand, clients, investors, and stakeholders from being swayed by unfounded or speculative reports are the driving forces behind our filing. As needed, we’ll keep posting these clarifications.”

OCL said, “The Company issued a formal explanation yesterday, explicitly denying that OCL, its associates, or our management are the subject of any Enforcement Directorate inquiry. Since then, more unfounded rumors have surfaced in the media regarding inquiries into potential foreign currency rule violations by the Company or its affiliate, Paytm Payments Bank Limited (PPBL). We would like to reaffirm that no such inquiry is being conducted against the Company or its affiliate Paytm Payments Bank Limited.”

RBI Directs Paytm Payments Bank Closure

Reserve Bank of India (RBI) governor Shaktikanta Das stated that the bank gave ample time to Paytm Payments Bank to comply with regulations and that business restrictions were only imposed when the regulated entity did not listen to constructive engagement. Last week, the RBI said that the regulatory actions were taken against Paytm due to “persisted non-compliance.” Paytm Payments Bank, the banking arm of Paytm, was ordered by the RBI last month to wind down most of its businesses, including deposits, credit products, and its well-known digital wallets, by February 29.

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“We allow enough time for each RE to meet the requirements. It could appear to be more than enough at times. We are an accountable regulatory body. If all requirements have been met, why should we take action? The organization put out an announcement expressing that the Panel comprises of prepared specialists like MM Chitale, a previous leader of the (ICAI) and a previous member from the Banking Codes and Standards Board of India’s governing council, both recommended by the Reserve Bank of India.