According to government officials who spoke with Reuters last week, the fintech was the subject of an investigation under certain sections of the Foreign Exchange Management Act (FEMA), which deals with international transactions for both individuals and corporations. Paytm, though, has refuted the reports

The Paytm controversy isn’t going away. Due to allegations made against Paytm Payments Bank, a case has been brought under the Foreign Exchange Management Act (FEMA) against the company. It was previously reported that the Enforcement Directorate was looking into potential violations of foreign currency regulations on platforms managed by One 97 Communications.
According to government officials who spoke to Reuters, the fintech was the subject of an investigation under certain sections of the Foreign Exchange Management Act (FEMA), which deals with international transactions for both individuals and corporations.

In this respect, the Enforcement Case Information Report has not been filed by the ED. At present, the only agencies investigating the matter are the Reserve Bank of India (RBI) and the Economic Department (ED).
At the beginning, Paytm has refuted claims made by the ED that it was looking into potential foreign exchange law violations at Paytm Payments Bank Ltd (PBBL), a division of the company.
The parent company of Paytm, One97 Communications Ltd (OCL), stated in a stock exchange filing that it rejects any reports of an investigation or a breach of foreign exchange regulations by the company or any of its affiliated PBBLs.

One 97 Communications Limited would want to clarify the company’s stance and directly address rumors in the recent false media stories regarding the company in order to correct recent disinformation, factual errors, and conjecture. Transparency and safeguarding our brand, clients, investors, and stakeholders from being swayed by unfounded or speculative reports are the driving forces behind our filing. As needed, we’ll keep posting these clarifications,” OCL stated.

OCL said, “The Company issued a formal explanation yesterday, explicitly denying that OCL, its associates, or our management are the subject of any Enforcement Directorate inquiry. Since then, more unfounded rumors have surfaced in the media regarding inquiries into potential foreign currency rule violations by the Company or its affiliate, Paytm Payments Bank Limited (PPBL). We would like to reaffirm that no such inquiry is being conducted against the Company or its affiliate Paytm Payments Bank Limited.”

The Reserve Bank of India gave Paytm Payments Bank, the company’s banking division, an order last month to shut down the majority of its operations, including its well-known digital wallets, credit products, and deposits, by February 29.According to the RBI, regulatory action against Paytm was initiated because of “persisted non-compliance” last week. Governor of the Reserve Bank of India (RBI), Shaktikanta Das, stated that the bank had given Paytm Payments Bank plenty of opportunity to follow the rules and that business limits were only put in place when the regulated entity ignored helpful dialogue.

“We allow enough time for each RE to meet the requirements. It could appear to be more than enough at times. We are an accountable regulatory body. If all requirements have been met, why should we take action?
Subsequently, the One 97 Communications Board declared the establishment of a Group Advisory Committee, led by the former Chairman of SEBI, M. Damodaran, to collaborate with the Board in enhancing regulatory affairs and compliance.
The company released a statement stating that the Committee consists of seasoned experts such as MM Chitale, a former president of the Institute of Chartered Accountants of India (ICAI) and a former member of the Banking Codes and Standards Board of India’s governing council, both recommended by the Reserve Bank of India.


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