In a significant development, the Enforcement Directorate (ED) is set to investigate Paytm Payments Bank for possible fund siphoning, as stated by Revenue Secretary Sanjay Malhotra. He emphasized that if any new charges of money laundering arise against Paytm by the Reserve Bank of India (RBI), the Directorate of Enforcement will conduct a thorough investigation in accordance with the law.
The move follows recent reports from Bloomberg, suggesting that the RBI is contemplating the revocation of Paytm Payments Bank Ltd.’s license, possibly as early as next month. Sources indicate that the RBI’s primary concern is the protection of depositors, and it might take action after the 29th February deadline, by which Paytm Payments Bank is required to halt customers from replenishing their savings accounts or the popular digital payment wallet.
Paytm Payments Bank, backed by SoftBank Group Corp., has been under regulatory scrutiny for some time, receiving multiple warnings over the past two years regarding questionable dealings between its widely-used payments app and its less-known banking arm. The RBI recently shocked the finance and tech industries by abruptly suspending a significant portion of the payments bank’s business. However, a potential license cancellation would be perceived as a more severe measure.
It’s important to note that Paytm Payments Bank operates as a restricted bank, allowing it to accept deposits but preventing it from engaging in lending activities. The unfolding situation highlights the increasing regulatory scrutiny on financial institutions and digital payment platforms, underscoring the need for stringent compliance measures in the rapidly evolving financial technology landscape.
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