Paytm to discontinue inter company agreements with paytm payments bank after scrutiny

Paytm to discontinue inter company agreements with paytm payments bank after scrutiny

Paytm to discontinue inter company agreements with paytm payments bank after scrutiny

Paytm to discontinue inter company agreements with paytm payments bank after scrutiny and is fined ₹5.49 crore for money laundering

The Reserve Bank of India has directed Paytm Payments Bank to cease providing basic banking services on March 16. The founder of Paytm, Vijay Shekhar Sharma, announced his resignation from the board of Payments Bank earlier this week on Monday. New directors, primarily from the banking and bureaucracy sectors, took over as directors of the bank.

In light of regulatory action against Paytm Payments Bank, Paytm said on Friday that it would be taking further steps to separate its services from those of the latter.

“One 97 Communications Ltd (Paytm) would like to inform that the Company and its associate entity, Paytm Payments Bank Limited (PPBL), have introduced additional measures to strengthen their approach towards independent operations of PPBL,” Paytm stated in a regulatory filing.

In the opening trade on the BSE Sensex, which surged over 600 points due to India’s strong third-quarter growth, Paytm’s shares were up 3.1% to Rs 417.80 per. At its peak of Rs 423 today, Paytm has recovered more than a hundred rupees from its record low of Rs 318.35 set last month.

Both Paytm and Payments Bank will stop their inter-company arrangements as part of their efforts to disentangle offers and lessen dependency. Paytm has previously declared that it will form new alliances with banks and take steps to ensure that its users and merchants received smooth services.

Paytm and PPBL have mutually decided to dissolve a number of inter-company agreements with Paytm and its group companies as part of this effort to decrease dependence. In addition, the PPBL shareholders have decided to streamline the Shareholders Agreement (SHA) in order to facilitate PPBL’s governance, which is separate and apart from its shareholders.

On March 1, 2024, the Board of OCL approved the revision and termination of the agreements with SHA, according to the document.

The RBI requested on January 31 that PPBL cease taking credit transactions, deposits, or top-ups in any client accounts, wallets, prepaid cards, FASTags, or National Common Mobility Cards after February 29. Later, the deadline was moved to March 15.

Apart from the Reserve Bank of India, the Enforcement Directorate was also examining the payments portal. The central agency performed an initial review of the records to determine whether any violations of the Foreign Exchange Management Act (FEMA) had occurred. In its investigation, the ED was unable to uncover any FEMA irregularities.

The founder of Paytm, Vijay Shekhar Sharma, announced his resignation from the board of Payments Bank earlier this week on Monday. New directors, primarily from the banking and bureaucracy sectors, took over as directors of the bank. The reconstituted board now consists of retired IAS officers Debendranath Sarangi and Rajni Sekhri Sibal, former executive director of Bank of Baroda Ashok Kumar Garg, and former chairman of the Central Bank of India Srinivasan Sridhar.

Japan’s Softbank decreased its ownership in payments company Paytm from 5.01% to 2.83% in response to the heightened scrutiny. The Japanese investor apparently intends to fully depart Paytm, thus it has been progressively lowering its position in the company.

In the filing, Paytm made it clear that even in the face of scrutiny, its services will continue to run smoothly. The company stated that it was “committed to uphold the highest standards of market leading innovation and technology enabled solutions for its customers.”

Paytm to discontinue inter company agreements with paytm payments bank after scrutiny

Paytm to discontinue inter company agreements with paytm payments bank after scrutiny and is fined ₹5.49 crore for money laundering

Paytm to discontinue inter company agreements with paytm payments bank after scrutiny and is fined ₹5.49 crore for money laundering by the Financial Intelligence Unit on Friday.

According to PTI, the Ministry of Finance was reported by the Financial Intelligence Unit as saying that Paytm Payments Bank was fined ₹5.49 crore on Friday for money laundering. The Reserve Bank of India banned the institution from taking new deposits on January 31 and later extended the ban till March 15. This action deals a new blow to the lender.

This occurs just hours after One97 Communications said that, in an effort to lessen dependency, the board of the company had terminated the inter-company agreements with the lending service.

According to the finance ministry, organizations involved in illicit operations kept bank accounts with Paytm Payments Bank through which they channeled revenues of crime.

The ministry stated that in response to information from law enforcement regarding a few entities and their network of businesses involved in various illegal activities, including organizing and facilitating online gambling, the financial intelligence unit had started a review of the Paytm lender.

“The Financial Intelligence Unit-India (FIU-IND),… has imposed a monetary penalty of ₹5.49 crore on Paytm Payments Bank Ltd with reference to the violations of its obligations under the PMLA (Prevention of Money Laundering Act),” the ministry stated in a statement. On February 15, the FIU issued the order imposing the penalty.

Prior to the deadline of March 15, Vijay Shekhar Sharma tendered his resignation on February 27 as the Paytm Payments Bank’s part-time non-executive chairperson. Reorganizing its board of directors, the Paytm lending service named retired IAS officer Debendranath Sarangi, former Bank of Baroda executive director Ashok Kumar Garg, former IAS officer Rajni Sekhri Sibal, and former Central Bank of India chairman Srinivasan Sridhar.

In order to facilitate this transition, Vijay Shekhar Sharma has also resigned from the Paytm Payments Bank Board, the firm has been told separately. One97 Communications had stated in a regulatory filing that “PPBL has informed us that they will begin the process of appointing a new Chairman.”

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