‘NO BREACHES FOUND YET’
Probe found lapses related to Patym Payments Bank’s so-called ‘know-your-customer’ rules
AN investigation into possible foreign exchange violations at Patym Payments Bank by India’s financial crime fighting agency has not yet found any breach, said a government source directly aware of the matter yesterday.
Last week, India’s Enforcement Directorate announced the investigation into overseas transactions by Paytm Payments Bank, a unit of One 97 Communications, popularly known as Paytm.
Paytm shares have plunged more than 50 per cent since the Reserve Bank of India (RBI) announced on Jan 31 that Paytm Payments Bank could no longer accept new funds into its accounts or wallet.
The rout has eroded around US$3.1 billion in shareholders’ wealth.
The probe found lapses related to socalled “know-your-customer” rules that verify the profiles of users, said the source.
But, the “Enforcement Directorate has not yet detected any foreign exchange management act violation by Paytm Payments Bank”, said the source.
There were also some issues with a suspicious transaction report not being generated by the bank, it said, adding that the Enforcement Directorate was determining whether to bring charges for any potential violation.
The Enforcement Directorate did not immediately respond to a request for comment.
Paytm replied yesterday with an earlier statement from last week saying it was providing information to the Enforcement Directorate and other authorities.
One 97 Communication shares rose by the exchange-allowed maximum of five per cent for a second session yesterday, taking total gains to a little over 10 per cent in two days.
Paytm Payments Bank secured a 15-day extension for its wind-down to March 15 from the RBI on Friday.
Also on Friday, Paytm said it signed on a new banking partner, Axis Bank, to try to keep some of its popular products running and survive its current crisis.
Analysts at Bernstein said the deadline extension would help smoothly transfer Paytm Payments Bank accounts and said Paytm’s merchants being able to use the company’s QR codes, soundbox and card machines was a “major positive”.
Citi analysts expects more banking partnerships, like the one with Axis, calling them “significant positives for ongoing business.”
However, Citi kept its “sell” rating on the stock, while Bernstein maintained “outperform.”