Why has the RBI taken action against the Paytm Payments Bank owned by Vijay Shekhar?

Why has the RBI taken action against the Paytm Payments Bank owned by Vijay Shekhar?

According to sources, Paytm Payments Bank Ltd. had hundreds of instances where a single PAN was used to register several accounts, and the bank had a large number of non-KYC compliant accounts.

The Reserve Bank of India has reportedly taken action against the companies run by tech entrepreneur Vijay Shekhar Sharma due to worries about money laundering and suspicious transactions involving hundreds of crores of rupees between the well-known wallet Paytm and its less well-known banking arm, according to news agency PTI. Motivated by. There have been sources cited in the news.

According to PTI, there were thousands of instances where a single PAN was used to register several accounts at Paytm Payments Bank Ltd (PPBL), which had a large number of non-KYC (Know Your Customer) compliant accounts.

The news agency was informed by sources that there had been instances when the total amount of transactions exceeded several crore rupees, significantly over the regulation threshold for minimum KYC pre-paid devices. This raised suspicions about potential money laundering.

After February 29, the RBI has ordered PPBL to cease a number of activities, including as taking new deposits, processing credit applications, and collecting tolls to top up client accounts, prepaid devices, wallets, and cards.

This instruction suggests that until February 29th, consumers will be able to access the money in their wallets and their current deposits.

But if RBI doesn't change its mind, Paytm wallet top-ups will end and transactions won't be feasible. The RBI recently gave the bank the order to cease taking deposits or top-ups in a variety of instruments after February 29 in a major action against PPBL.

There are around 35 crore e-wallets at Paytm Payments Bank. Just approximately 4 crore of them are active, either with no balance or a minimal amount, and roughly 31 crore are dormant, an expert told PTI.

It is believed that a sizable number of dormant accounts are being exploited as mule accounts. According to PTI, this led to notable anomalies in the KYC procedure, which put clients, depositors, and wallet owners at grave danger.

According to sources who spoke to PTI, the RBI found significant infractions of the KYC and anti-money laundering regulations in 2021 and ordered the bank to correct these shortcomings. Problems continued in spite of these directives, and the Bank's compliances were often seen as erroneous and lacking.

RBI's concern

According to sources cited by news agency Reuters, the RBI is concerned that some accounts could have been used for money laundering. According to reports, the RBI has not only notified the ED but also the Prime Minister's Office and the Home Ministry about its findings.

A spokeswoman for PPBL said, "We can confirm that neither we nor the founder-CEO of One97 Communications Limited have been developed the subject of an enforcement department investigation in relation to money laundering."

"Some merchants using the platform have been the subject of investigations," the representative said, "and we respond to the authorities whenever asked." We warn you against speculating and vehemently dispute the accusations of money laundering.

A senior government source told PTI that the ED would look into the money laundering claims more thoroughly if necessary.

The parent business of the Paytm brand, One97 Communications Ltd., witnessed a 40% decline in share price in the previous two days due to the RBI instruction. The stock reached its daily lower trading limit on the BSE on Friday after falling 20% to ₹487.05. The company's market capitalization (MCAP) fell by ₹17,378.41 crore during the course of these two days, to ₹30,931.59 crore.