The RBI may cancel the license of Paytm Payments Bank next month, after finding evidence of fund siphoning and violation of banking norms. The ED will investigate the bank as per the law of the land.
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ED’s role in probing money laundering charges
The Enforcement Directorate (ED) will investigate Paytm Payments Bank for any fresh charges of money laundering, Revenue Secretary Sanjay Malhotra said, as reported by Reuters. He added that the ED will act as per the law of the land if the Reserve Bank of India (RBI) finds any evidence of fund siphoning by the payments bank.
RBI’s action against Paytm Payment Bank
According to Bloomberg, the RBI is considering scrapping the license of Paytm Payments Bank as early as next month, after the 29 February deadline when the bank is required to stop customers from replenishing their savings accounts or the popular digital payment wallet. The RBI wants to safeguard depositors first and could take a drastic step against the bank, which operates as a restricted bank that can take deposits but cannot lend.
Paytm Payments Bank’s response and impact
Paytm Payments Bank, backed by SoftBank Group Corp., has been under the scanner of the regulator for some time, with multiple warnings over the past two years about questionable dealings between its popular payments app and its lesser-known banking arm. This week, the RBI shocked the finance and tech industries by abruptly suspending much of the payments bank’s business, but a license cancellation would be seen as a more severe move.
Paytm has not commented on the reports yet. The bank claims to have over 58 million customers and a network of over 5 lakh merchants across India. It offers services such as savings accounts, debit cards, money transfers, and bill payments.
With inputs from Mint
