ED Questions Paytm Executives in Preliminary Probe of Alleged FEMA Irregularities

The Enforcement Directorate (ED) has initiated inquiries into alleged Foreign Exchange Management Act (FEMA) irregularities flagged by the Reserve Bank of India (RBI), questioning senior executives of Paytm and requesting further details on submitted documents.

The ED’s scrutiny follows the submission of certain documents by Paytm officials as part of the ongoing inquiry. The agency will determine the necessity of a formal investigation based on the findings from this preliminary probe.

RBI’s directive to halt deposits or top-ups in customer accounts at Paytm’s banking arm, Paytm Payments Bank Ltd (PPBL), remains in effect.

As of now, the ED has not identified any FEMA irregularities. However, they are concurrently conducting an investigation under the Prevention of Money Laundering Act (PMLA) related to the company.

Issues of Know Your Customer (KYC) non-compliance, as raised by the RBI, fall under the central bank’s jurisdiction, limiting the ED’s authority to take action in this regard.

Paytm has clarified that PPBL does not engage in outward foreign remittances.

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In response to regulatory inquiries, Paytm and its affiliates have cooperated by providing necessary information, documents, and explanations to the authorities.

Market reaction to these developments has been notable, with Paytm shares declining by 5 percent and hitting a new 52-week low on Thursday. This decline triggered a lower circuit limit, which was revised from 10 percent to 5 percent on February 15th.