ED probes Paytm, banking sector for FX irregularities: Report

India’s financial crime agency is investigating whether a platform run by One 97 Communications, also known as Paytm, was involved in violating foreign exchange rules, two senior government sources said.

The sources did not indicate that specific provisions of the Foreign Exchange Management Act (FEMA) covering overseas transfers by individuals and businesses were the subject of the Enforcement Directorate’s investigation.

Two sources said the Enforcement Directorate has written to the central bank seeking data related to transactions on the Paytm platform.

One of the sources added that investigators have not yet contacted Paytm.

The sources declined to be named because they were not authorized to speak to the media.

The Enforcement Directorate and the Treasury Department, which oversee the agency, did not immediately respond to requests for comment.

A Paytm spokesperson said the allegations of FEMA violations were “baseless and factually incorrect”.

The Reserve Bank of India on Wednesday ordered Paytm affiliate Paytm Payments Bank to close most of its operations, including deposits, credit products and its popular digital wallet, by February 29.

However, there have been no previous reports that the government was investigating possible breaches of foreign exchange rules involving the bank or its parent company’s platform.

A Paytm spokesperson said that any form of overseas remittance cannot be initiated from a bank account or wallet account at Paytm Payments Bank.

“We strongly deny any speculation that One 97 Communications or its associate Paytm Payments Bank may have violated FEMA regulations,” the spokesperson said via email.

“The licenses of payment banks restrict them from carrying out operations related to outbound remittances, which are only permitted to large commercial banks in India.”

(This story has not been edited by News18 staff and is published from a Yonhap news agency feed – Reuters)