Paytm denies violating forex norms; says banking arm not facing ED probe

The RBI on January 31 directed the Paytm Payments Bank to stop accepting deposits or top-ups in customer accounts, wallets, FASTags and other instruments after February 29.

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26 Aug, 2025 12:21

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One97 Communications, the parent entity of Paytm, on February 5 dismissed reports that claimed that the company is facing a regulatory probe to ascertain if it violated foreign exchange norms.

The company denied flouting rules that govern forex, while also clarifying that the Enforcement Directorate has not launched a probe against Paytm or its banking arm Paytm Payments Bank Limited (PPBL) for the alleged violations.

The clarification came shortly after news agency Reuters, citing two government sources, reported that the Enforcement Directorate is investigating if platforms run by Paytm were involved in violations of foreign exchange rules.

"One97 Communications Ltd (OCL) denies reports of investigation or violation of Foreign Exchange rules by the Company or its associate Paytm Payments Bank Limited," the Vijay Shekhar Sharma-led company said in a regulatory filing.

Notably, the sources cited in the Reuters report did not indicate what specific provisions of the Foreign Exchange Management Act (FEMA), which covers individual and corporate transfers overseas, were the subject of the investigation by the ED.

Paytm had also issued a clarification late on February 4, after another Reuters reported citin Revenue Secretary Sanjay Malhotra to claim that the ED will probe PPBL if any fresh charges of fund siphoning are found.

”If there are any fresh charges of money laundering against Paytm by RBI, those will be investigated by Directorate of Enforcement as per the law of the land,” Malhotra was quoted as saying by the news agency.

However, while speaking to Moneycontrol, the revenue secretary clarified that the law enforcement agencies will probe Paytm if needed but at the moment there is no such action afoot.

"If there is any action to be taken, law enforcement agencies will take it. Right now there is nothing," Malhotra told this publication.

Earlier in the day, Paytm's stock crashed by another 10 percent, thereby leading to an overall value erosion of more than 40 percent in the past three days. The shares have been declining in the aftermath of the Reserve Bank of India (RBI) announcing major business restrictions on PPBL.

The RBI, on January 31, directed the payments bank to stop accepting fresh deposits and making credit transactions after February 29.

Paytm Payments Bank has also been barred from accepting top-ups in any customer accounts, including prepaid instruments, wallets, FASTags, and NCMC cards.

The RBI said it was taking action against Paytm Payments Bank after the Comprehensive System Audit and compliance validation report of the external auditors revealed "persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action".

Since then, reports have also emerged that the RBI is considering cancelling the licence of Paytm Payments Bank as early as next month once depositors are safeguarded.