Paytm Payments Bank: Money laundering considerations and questionable dealings of tons of of crores of rupees between widespread pockets Paytm and its lesser-known banking arm had led the Reserve Bank of India (RBI) to clamp down on tech poster boy Vijay Sekhar Sharma-run entities, sources mentioned.
The central financial institution has ordered Paytm Payments Bank Ltd (PPBL) to halt most of its enterprise together with taking additional deposits, conducting credit score transactions and finishing up top-ups on any buyer accounts, pay as you go devices, wallets, and playing cards for paying highway tolls after February 29 (Thursday).
This means prospects can entry their present deposits and pay for companies with cash saved of their wallets until February 29. And in case, RBI doesn’t relent, top-up for Paytm pockets will cease and transactions by way of it could now not might be carried.
Know extra about ban on Paytm Payments Bank by RBI:
In a serious motion in opposition to PPBL, the Reserve Bank earlier this week directed the lender to cease accepting deposits or top-ups in buyer accounts, wallets, FASTags and different devices after February 29. The PPBL, sources mentioned, had lakhs of non-KYC (Know Your Customer) compliant accounts and in hundreds of circumstances single PANs have been used for opening a number of accounts.
There have been cases the place the entire worth of transactions- operating into crores of rupees, a lot past regulatory limits in minimal KYC pre-paid devices elevating cash laundering considerations, sources mentioned. According to an analyst, Paytm Payments Bank has about 35 crore e-wallets. Of this, about 31 crore are dormant whereas solely about 4 crore can be operative with both no stability or a small stability.
An unusually excessive variety of dormant accounts are susceptible to have been used as mule accounts. So, there have been main irregularities in KYC, which uncovered the purchasers, depositors and pockets holders to severe danger.
KYC associated violations:
Sources mentioned the RBI in 2021 detected severe KYC Anti Money Laundering violations and the financial institution was directed to tackle these deficiencies. However, they continued to persist. The compliances submitted by the financial institution have been discovered to be incomplete and false on many events, sources mentioned.
Accordingly, in March 2022, RBI imposed supervisory restriction on PPBL to cease on-boarding new prospects with speedy impact and to appoint an exterior audit agency to conduct a complete system audit. There are a number of circumstances the place the accounts and wallets have been frozen by varied regulation enforcement companies throughout the nation as such accounts have been used for committing digital frauds.
As a part of a clean-up train, the Enforcement Directorate (ED) in September 2022 had performed raids on the premises of PPBL and its father or mother entity One97 Communications Ltd (OCL) and different cost aggregators. The ED had initiated a probe beneath the felony sections of the Prevention of Money Laundering Act (PMLA) after a lot of cases of gullible debtors ending their lives got here to the fore from varied states.
It was alleged that the unlawful digital mortgage corporations sourced all private information of the loan-taker on the time of downloading these apps on their telephones. The company had mentioned the alleged proceeds of crime within the case have been routed by way of e-wallets and another cost aggregators. According to a senior authorities official, ED would additional probe cash laundering allegations going ahead if required.
Shares of Paytm slumped down:
Following the RBI’s route, shares of One97 Communications Ltd, which owns Paytm model, slumped 40 per cent within the final two days. The inventory tanked 20 per cent to Rs 487.05, its lowest buying and selling permissible restrict for the day, on the BSE on Friday (February 2).
In two days, the corporate’s market capitalisation (mcap) eroded by Rs 17,378.41 crore to Rs 30,931.59 crore.
(With companies inputs)
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