Paytm Shares Tank Another 5% Despite Addressing ED Probe Rumours

Paytm shares slumped on Thursday despite the company’s parent company, One 97 Communications Limited, addressing rumours of an Enforcement Directorate (ED) investigation.

What Happened? The company, in a statement to the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), asserted that it has not violated the Foreign Exchange Management Act (FEMA) and that no case has been filed against it by the ED. The company clarified that its subsidiary, Paytm Payments Bank, does not engage in any outward foreign remittances.

Paytm explained that both One 97 Communications and Paytm Payments Bank have cooperated with authorities, including the ED, by providing information, documents, and explanations about their customers’ transactions. They have consistently complied with requests for information and maintained transparency as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Paytm vehemently denies any allegations of an ED case related to FEMA violations, labelling such news as “baseless, misleading, and malicious.”

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This statement comes at a critical time as Paytm Payments Bank faces a deadline set by the Reserve Bank of India (RBI) for February 29. After this date, the bank must halt all transactions and deposits by merchants and customers.

What to know? Controversy surrounds Paytm Payments Bank due to a recent RBI investigation. The RBI discovered multiple regulatory violations by the bank, including non-compliance with Know Your Customer (KYC) rules.

The investigation revealed that hundreds of thousands of accounts at Paytm Payments Bank were operating without proper KYC, with some accounts linked to only one KYC document. This raised significant concerns about potential money laundering and data security risks.

Price Action: One 97 Communications Ltd. shares were trading 5% lower at ₹325.05 on Thursday afternoon.

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