In a recent development, Paytm Payments Bank has been slapped with a hefty penalty of ₹5.49 crore by the Financial Intelligence Unit (FIU) for alleged involvement in money laundering activities. The fine comes as a significant blow to the digital payment giant, which has been facing mounting regulatory scrutiny in recent months.
According to reports, the FIU imposed the penalty on Paytm Payments Bank after an investigation revealed that the bank had been used as a conduit for routing proceeds of crime by entities engaged in illegal activities. The Finance Ministry, in a statement, highlighted that several bank accounts maintained with Paytm Payments Bank were allegedly linked to entities involved in unlawful practices, including online gambling.
The enforcement action against Paytm Payments Bank follows closely on the heels of a directive from the Reserve Bank of India (RBI), which barred the bank from accepting new deposits starting from January 31. This directive was later extended to March 15, further complicating the bank’s operations.
Notably, One97 Communications, the parent company of Paytm Payments Bank, recently announced the discontinuation of inter-company agreements with the lending service in a bid to reduce dependencies. This move underscores the company’s efforts to streamline its operations amid regulatory challenges.
Reacting to the penalty, a spokesperson for Paytm Payments Bank emphasized that the issues leading to the fine pertained to a business segment that was discontinued two years ago. The spokesperson further stated that the bank has since implemented enhanced monitoring systems and reporting mechanisms to ensure compliance with regulatory requirements, particularly those related to the Prevention of Money Laundering Act (PMLA).
In another development, Vijay Shekhar Sharma, the founder of Paytm and part-time non-executive chairperson of Paytm Payments Bank, tendered his resignation ahead of the March 15 deadline. This move is seen as part of a broader restructuring effort within the company, which recently revamped its board of directors with the appointment of seasoned professionals from the banking and regulatory sectors.
The departure of Vijay Shekhar Sharma from the board of Paytm Payments Bank signals a transition period for the company, which is now tasked with appointing a new chairman to oversee its operations and navigate the challenges posed by regulatory scrutiny.
As Paytm Payments Bank grapples with the aftermath of the penalty and strives to regain regulatory trust, stakeholders are closely monitoring developments within the company amidst concerns about its compliance practices and future prospects in the digital payments landscape.
Sources By Agencies
