'Misleading, Baseless & Malicious': Paytm Denies Reports Of ED Probe, Forex Violations

One97 Communications Limited, also known as Paytm, on Monday denied reports of Investigation or violation of Foreign Exchange rules by the Company or its associate Paytm Payments Bank Limited.

Paytm’s clarification came after news agency Reuters, citing two senior government sources, reported that India’s financial crime-fighting agency is investigating if platforms run by One 97 Communications.

“To address recent misinformation, factual Inaccuracies, and speculation, One97 Communications Limited (OC/Paytm / Company) would like to set out the Company’s position and directly address rumors in the recent misleading media reports about the Company. This filling is done in the Interest of transparency, and protecting our reputation, customers, shareholders, and stakeholders from being influenced by unwarranted and speculative stories. We will continue to post such clarifications, as required,” Paytm said in a statement.

The company said it filed a specific clarification yesterday, categorically denying any Investigation by the Enforcement Directorate on OCL, our associates and our management.

“We have since seen additional media reports making baseless speculations about investigations of the Company or its associate Paytm Payments Bank Limited (PPBL) for violation of foreign exchange rules. We would like to reiterate that the Company and its associate Paytm Payments Bank Limited are not the subject matter of any such investigation. Such media reports are entirely misleading, baseless and malicious, which harm the interests of all our stakeholders,” the statement said.

Here’s Why RBI Banned Paytm Payments Bank

According to a Reuters report, the sources 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 Enforcement Directorate.

The Enforcement Directorate has written to the central bank to seek data relating to transactions by Paytm’s platforms, the two sources said.

One of the sources added that the investigators were not yet in contact with Paytm. The sources declined to be named because they were not authorised to speak to the media.

The Enforcement Directorate and the Ministry of Finance, which oversees the agency, did not immediately respond to requests for comment.

A spokesperson for Paytm said that allegations regarding FEMA violations were “unfounded and factually incorrect”.

Shares of One97 Communications Ltd fell by another 10 per cent to hit its lower circuit limit, as investors continued to dump the stock following the RBI’s crackdown.

The stock tanked 10 per cent to Rs 438.35 — its lowest trading permissible limit for the day — on the BSE. It plummeted 9.99 per cent to hit its lower circuit limit of Rs 438.50 on the NSE. In three days, the stock has tumbled over 42 per cent, wiping out Rs 20,471.25 crore, from its market valuation.

RBI’s Action Against Paytm Payments Bank

The Reserve Bank of India on Wednesday ordered Paytm Payments Bank, an affiliate of Paytm, to wind down most of its businesses, including deposits, credit products and its popular digital wallets, by Feb. 29.

There had previously been no reports, however, of a government investigation of possible foreign exchange rule violations involving the platforms of the bank or its parent company.

The Paytm spokesperson said no overseas remittances of any kind could be initiated from bank accounts or wallet accounts at Paytm Payments Bank.

“We vehemently deny any speculations on alleged FEMA violations by One 97 Communications or its associate Paytm Payments Bank,” the spokesperson said via email.

“The licence for payments banks restricts them from conducting operations related to outward remittances, which are exclusively permitted for large commercial banks in India.”

(with Reuters inputs)