Paytm’s Troubles Mount: ED Probes Preliminary Examination

Business View
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Paytm's Troubles Mount: ED Probes Preliminary Examination

One after another new challenges are coming in front of India’s top fintech company. After the strict action of the Reserve Bank of India (RBI) against Paytm, new challenges are emerging in front of the company whether it’s a drop in shares or monetizing its market leadership. Now there is a new addition to their problem which will surely impact their ongoing challenges. On Wednesday, 14th Feb 2024, the Enforcement Directorate (ED) stated that they have started a preliminary inquiry against the One97 Communications-owned company. The latest move of the central agency is a fresh problem with the Payments Bank, particularly after the RBI ruled out any review of its clampdown against the entity. 

Paytm Under ED Probe: Company Denies Violation, Provides Information

As of now, there are no official statements came forward by ED on Paytm regarding the investigation initiated by ED. This news has created a buzz in the market and the customers of Paytm are more worried about the situation. It is worth noting that, earlier the RBI released an order against Paytm Payments Bank in which the central bank of India halted the financial-related services by 1st March 2024. One of the government sources in New Delhi talked to a media outlet and stated “This is a preliminary examination”. 

Another news report has stated that the parent company of Paytm has made an official statement. In a regulatory filing, One 97 Communications Limited has cited a media report in which the news of the preliminary investigation against Paytm has been initiated by ED under the Foreign Exchange Management Act (FEMA). In the report, the firm has rejected the investigation that has been initiated under the FEMA. The company clarified that the associate of their company, Paytm Payments Bank Limited does not undertake Outward Foreign Remittance. 

Is It True ED Is Probing Against Paytm?

Now this feeling has put everyone into a confusing situation. One 97 Communications did not fully accept or deny the report of the ED investigation against Paytm. However, the reports state that officials from PPBL were summoned by ED for interrogation, the sources have disclosed, as part of a probe into alleged breaches of FEMA by entities using its services. The sources stated that the firm provided the details, documents and information sought by the agency. It’s further added that the ED has asked the company to share additional details and they want all the details by next week. 

A top government official talked to a media outlet and stated that “The information gathered so far and the documents shared by Paytm Payments Bank prima facie do not exhibit any violation of Fema so far.” Apart from it, in the filing, the company states that “We have always made and will continue to make disclosures with our obligations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015”.

What Actually Has Happened?

On Wednesday, the reports of the probe against Paytm by ED came to light. The reports further added that the investigation concerning ED, FIU, and FEMA are probing into the matter. The reports add that the agencies are looking into the report of RBI into the matter. It is worth noting that the reports of the ED probe initially existed last week as well but at that time the first had entirely rejected such probe news. But this time, it is assumed that the news is true and ED is probing against Paytm.

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