ED probe on Paytm horizon; CEO knocks on FM’s doors

The Directorate of Enforcement (ED) is likely to initiate a formal probe into Paytm to investigate issues flagged in the reference from the Reserve Bank of India (RBI), said people familiar with the matter.

Paytm founder and chief executive officer Vijay Shekhar Sharma Tuesday met finance minister Nirmala Sitharaman in the backdrop of the banking regulator’s action against the fintech firm. He had met top RBI officials on Monday.

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A comprehensive investigation could be initiated in view of the reference after ascertaining relevant details, said one of the persons.

ET reported February 3 that the RBI had alerted the ED a few months ago about possible violations of anti-money laundering provisions and know-your-customer (KYC) norms at Paytm.

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The company, however, maintained there are no ongoing ED probes into the company or founder Sharma.

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“We must clarify that reports suggesting an impending probe into Paytm or its associate Paytm Payments Bank by the Enforcement Directorate, based on an RBI report, are factually incorrect and without foundation,” it said in response to ET’s queries.

The company had issued a denial in a stock exchange filing on February 4.

“Neither the company nor its founder and CEO are being investigated by the Enforcement Directorate regarding inter alia money laundering. In the past, certain merchants/users on our platforms have been subject to enquiries and on those occasions, we have always cooperated with the authorities,” it had said. “We would like to set the record straight and deny any involvement in anti-money laundering activities. We have and continue to abide by Indian laws and take regulatory orders with utmost seriousness.”

Sharma explained to the finance minister the company’s position with regard to the various issues flagged by the regulator in a short meeting. The minister is understood to have impressed upon Sharma the need to discuss the matter with the RBI and sort out the non-compliances that have been flagged.

At the meeting with the RBI, Sharma is understood to have sought an extension of the February 29 deadline, a transition plan and detailed the efforts underway to meet compliances specified by the regulator.

In a January 31 order, the Reserve Bank asked Paytm Payments Bank to stop all basic payment services through various platforms and technology railroads with effect from February 29.

Paytm had held a board meeting within days of the RBI diktat and conveyed that it was working with the regulator to address all concerns, another person said.

Harry Byrne

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