Paytm crisis: The Reserve Bank of India (RBI) reportedly blocked Paytm Payments due in part to the fact that hundreds of accounts were opened without the required documentation. According to sources cited by NDTV, these accounts that were opened without the required know-your-customer (KYC) information carried out transactions on the platform worth crores of dollars, raising possible suspicions of money laundering.
It was discovered that more than 1,000 people had linked their accounts to the same permanent account number (PAN). Sources claim that a "unusually" high number of inactive accounts were also discovered.
The central bank and auditors discovered that the compliance that Paytm Payments Bank had submitted was inaccurate during their verification procedures. The central bank has shared its findings with the prime minister's office and the ministry of home affairs in addition to the Enforcement Directorate.
Moreover, regulatory concerns have increased due to substantial transactions inside the group that were not declared and linked parties. Furthermore, the RBI discovered problems with governance, particularly in the relationship between Paytm Payments Bank and One97 Communications Ltd., the bank's parent firm. A Paytm Payments Bank representative stated, "One 97 Communications Ltd. and Paytm Payments Bank have never been probed by the Enforcement Directorate."
"We provide information to authorities on the same as and when requested, and some of the merchants who use our platforms have been the focus of investigations. We adamantly deny accusations of money laundering and advise against conjecture," the official added.
Transactions through Paytm Payments Bank hae been temporarily suspended as a result of concerns about data privacy. Up to February 29, the bank's activities will be reliant on other banks.
In the four days that followed the RBI's announcement, the company's stock fell 10% on Tuesday morning to 48%. Furthermore, in an attempt to reassure stakeholders amid the current turmoil, Paytm's founder, Vijay Shekhar Sharma, described the regulatory proceedings as a "speed bump" on a conference call with analysts.
