1,000 Users, Same PAN Card: What Led To RBI's Crackdown On Paytm Payments Bank
The Reserve Bank of India (RBI) has imposed stringent measures on Paytm Payments Bank after uncovering significant compliance issues, including hundreds of accounts created without proper identification.
These accounts, lacking adequate Know-Your-Customer (KYC) procedures, conducted transactions worth crores of rupees, raising concerns about potential money laundering.
More than 1,000 users linked same PAN card??
Among the alarming discoveries, more than 1,000 users were found to have linked the same Permanent Account Number (PAN) to their accounts, indicating a systemic failure in compliance measures. The RBI, along with auditors, found discrepancies in the bank's submitted compliance reports during verification processes.
The central bank has expressed concerns that some of these accounts could have been utilized for illicit activities, prompting them to notify authorities such as the Enforcement Directorate, the Ministry of Home Affairs, and the Prime Minister's Office.
ED to launch a probe into Paytm Payments Bank??
Revenue Secretary Sanjay Malhotra has confirmed that the Enforcement Directorate will launch a probe into Paytm Payments Bank if evidence of illegal activity is found.In addition to KYC lapses, reports emerged regarding the non-disclosure of major transactions within the Paytm group and its associated parties, exacerbating regulatory concerns.
The RBI's scrutiny also revealed governance deficiencies, particularly in the linkage between Paytm Payments Bank and its parent company, One97 Communications Ltd.Furthermore, transactions routed through the parent app of Paytm raised data privacy apprehensions, prompting the RBI to halt transactions through Paytm Payments Bank.
While user deposits remain unaffected initially, the company will need to rely on third-party banks for its operations until February 29.
Paytm's stock experienced a significant decline??
In response to the RBI's actions, Paytm's stock experienced a significant decline, plummeting 36% over two days and erasing $2 billion from its market value.
Despite the regulatory setbacks, Paytm founder Vijay Shekhar Sharma downplayed the impact, referring to the situation as a "speed bump" during a conference call with analysts. Sharma aimed to reassure stakeholders amid the ongoing turbulence surrounding the company's regulatory compliance issues.
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