India’s central bank, the Reserve Bank of India (RBI), has discovered that hundreds of thousands of accounts at Paytm Payments Bank were created without proper identification. This information has been relayed to the country’s financial crime-fighting agency, raising concerns about potential money laundering activities, according to three anonymous sources familiar with the matter.
The RBI, alarmed by the possibility of illicit financial activities, has shared its findings not only with the Enforcement Directorate but also with the Ministry of Home Affairs and the Prime Minister’s Office, as reported by the sources.
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In response, a spokesperson for Paytm Payments Bank’s parent company, One 97 Communications Ltd., emphasized that neither entity has been previously probed by the Enforcement Directorate. The spokesperson acknowledged that some merchants using their platforms have been investigated, and they vehemently denied any allegations of money laundering, cautioning against baseless speculation.
Despite reaching out for comments, the RBI, the Enforcement Directorate, the Finance Ministry, the Home Ministry, and the Prime Minister’s Office have not responded to inquiries outside regular office hours.
In a recent development, the RBI directed Paytm Payments Bank to wind down most of its operations, including deposits, credit products, and its popular wallet, by February 29. The decision, citing persistent non-compliance and ongoing supervisory concerns, did not disclose specific details.
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Revenue Secretary Sanjay Malhotra stated that the Enforcement Directorate would launch an investigation into Paytm Payments Bank if evidence of illegal activities is uncovered. Following the RBI’s action, Paytm’s stock experienced a 36% decline over two days, resulting in a $2 billion reduction in market value.
Vijay Shekhar Sharma, the founder of Paytm, downplayed the RBI’s move during a conference call with analysts, referring to it as a “speed bump” in the company’s journey.
Two of the sources revealed that multiple accounts at Paytm Payments Bank were associated with the same identification proof, and transactions in these accounts amounted to millions of rupees. Additionally, an unusually high number of dormant accounts were identified during the investigation.
