A worker adjusts a hoarding of Paytm, a digital payments firm, in Ahmedabad, India.
| Photo Credit: AMIT DAVE

Amid reports that the Enforcement Directorate (ED) had on Wednesday filed cases against Paytm for alleged FEMA violations, One 97 Communications Ltd., the parent company of Paytm, neither confirmed nor denied the reports and told stock exchanges that the company, its subsidiaries and its associate, Paytm Payments Bank Limited, have over time been receiving notices from various authorities including the ED.

In a clarification to the exchanges, the company said that besides notices it has received requests for information, documents and explanations from the authorities, including ED, with respect to customers that may have done business with the respective entities. It added that it has provided the required information, documents and explanations to the authorities.

Also read: The Paytm Payments Bank debacle | Explained

“The Company and its associate have continued to provide such information, documents and explanations to the authorities as is being required by them,” it said in a filing with the exchanges.

“We would also like to clarify that our associate Paytm Payments Bank Limited does not undertake Outward Foreign Remittance. We have always made and will continue to make disclosures with our obligations under the SEBI Regulations, 2015,” it added.

The price of the company’s stock continued its fall in the exchanges. It fell 9.99% to ₹342.35 on the BSE.

Paytm. File.
| Photo Credit: REUTERS

Shares of Indian digital payments firm Paytm slumped 10% to a near record low on Monday, extending a rout from last week triggered by a regulatory crackdown on its banking unit.

Paytm has lost about $2.5 billion or about 43% of its market value since the Reserve Bank of India (RBI) told Paytm Payments Bank on Wednesday to stop accepting fresh deposits in its accounts or popular wallets from March.

The stock fell by its daily trading limit to ₹438.5 ($5.28) on Monday, just shy of the previous all-time low of ₹438.35 hit in November 2022.

RBI’s order, which has far-reaching consequences for how India’s most popular digital payments app Paytm operates, led to a 20% drop in the stock — its daily maximum at that time — on Thursday and Friday.

Paytm is in exploratory talks with HDFC Bank and Jio Financial Services to sell its wallets business, which is housed under Paytm Payments Bank, the Hindu Business Line newspaper reported on Monday.

Paytm, HDFC Bank and Jio Financial did not immediately respond to Reuters’ requests for comment.

Also read: Paytm app will continue to work beyond February 29 as usual: CEO Vijay Shekhar Sharma

The RBI has found hundreds of thousands of accounts at Paytm Payments Bank created without proper identification and has passed the information on to the country’s financial crime fighting agency, three sources familiar with the matter said.

The RBI is concerned that some of the accounts could have been used for money laundering, according to the sources.

India’s Revenue Secretary Sanjay Malhotra told Reuters on Saturday the financial crime fighting agency would probe Paytm Payments Bank if any fresh charges of fund siphoning are found.

Paytm denied money laundering allegations and said the company and Paytm Payments Bank have never been probed by the Enforcement Directorate.

India’s stock exchanges have cut Paytm’s daily trading limit to 10% from 20%, after the stock crashed on Thursday and Friday.

Paytm app is seen on a smartphone in this illustration image. File
| Photo Credit: Reuters

Traders’ body CAIT on February 4 issued a cautionary advisory to traders to switch from Paytm to other payment options for business-related transactions following RBI curbs on Paytm wallet and bank operations.

“The Reserve Bank of India has imposed certain restrictions, prompting CAIT to recommend that users take proactive measures to protect their funds and ensure uninterrupted financial transactions. Large number of small traders, vendors, hawkers and women are making payments through Paytm and as such RBI restrictions on Paytm could lead financial disruption to these people,” the Confederation of All India Traders (CAIT) stated.

Money laundering concerns and questionable dealings of hundreds of crores of rupees between popular wallet Paytm and its lesser-known banking arm had led Reserve Bank of India to clamp down on tech poster boy Vijay Shekhar Sharma-run entities, according to sources.

The central bank has ordered Paytm Payments Bank Ltd (PPBL) to halt most of its business including taking further deposits, conducting credit transactions and carrying out top-ups on any customer accounts, prepaid instruments, wallets, and cards for paying road tolls after February 29.

This means customers can access their existing deposits and pay for services with money stored in their wallets till February 29. And in case, RBI does not relent, top-up for Paytm wallet will stop and transactions through it would no longer can be carried.

CAIT Secretary General Praveen Khandelwal said that the recent restrictions imposed by RBI on Paytm have raised concerns about the security and continuity of financial services provided by the platform.

He emphasised the urgency of this advisory, urging traders to act promptly and make informed decisions to mitigate any potential adverse effects on their financial operations.