1000 users registered with Paytm Payments Bank were found to have linked the same permanent account number (PAN) to their accounts.
Image credits: Paytm
New Delhi: Hundreds of accounts created on Paytm payments bank without proper identification were identified as a major reason for the Reserve Bank of India to impose stringent actions on the company, people familiar with the matter said. These accounts with inadequate Know Your Customer (KYC) were transacting crores of rupees on the platform, luring the fears of money laundering.
More than 1000 users were found to have linked the same PAN to their accounts. It was found in the compliance report submitted by Paytm Payments Bank to be incorrect during audits.
RBI suspected that some of the accounts could have been used for money laundering. The findings were sent to the Ministry of Home Affairs and the prime minister’s office by the enforcement directorate.
Revenue Secretary Sanjay Malhotra told Reuters, that the enforcement directorate will probe Paytm Payments Bank if any evidence of illegal activity is found. There was non-disclosure of major transactions within the group by major parties, further intensifying the regulatory worries. The Central Bank’s scrutiny also found loopholes in the governance standards, particularly Bank and its parent company, one97Communication Ltd.
While users deposit in savings accounts, wallets FASTags, and NCMC accounts are not immediately affected, the company will have to rely upon the third party banks for its transactions till 29th February 2024.
Following the RBI notice, Paytm Payments Bank witnessed a sharp fall, losing over 26% over two days and wiping $2 Billion of its market value.
Paytm founder Vijay Shanker Sharma dismissed the regulatory actions stating them as “speed bumps” during a conference call with the analysts, assuring the stakeholders amid the ongoing turbulent winds.
Related: Paytm Payments Bank Faces RBI Ban: last date 29th Feb 24
