New Delhi: The Enforcement Directoratewhich is being investigated Paytm Payments BankA branch of One 97 Communications for Sambhavna forex violationAccording to Reuters report, no violations have been found so far.
A government source told Reuters that although no Foreign Exchange Management Act violations were detected, the investigation highlighted lapses in compliance with Know Your Customer (KYC) norms and issues with generation of suspicious transaction reports. .
The source told Reuters there were issues with the bank not generating suspicious transaction reports, adding that the Enforcement Directorate was still exploring whether to lay charges for any potential violations.
why it matters
The inquiry follows regulatory action by the Reserve Bank of India (RBI), which halted acceptance of new customer funds into Paytm’s accounts, resulting in a significant 50% decline in Paytm’s share price since January 31, amounting to around Rs 3.1. There was a loss of billion dollars. In the shareholder’s property.
Jefferies Financial Group Inc. has put its analysis of Paytm on hold, citing the need to “manage” the situation, according to a Bloomberg report. The move marks Jefferies as the first significant international brokerage to suspend coverage on the troubled Indian fintech giant.
“Without a banking license, Paytm’s business model will now resemble that of pure payment service providers,” the Bloomberg report said. “Paytm’s focus will now shift to ensuring customer retention, and we believe it will draw down its Rs 85 billion ($1 billion) cash reserves to spend on retaining users,” the analysts said.
zoom in: Amid the turmoil, Paytm has managed to get a crucial extension of 15 days from the RBI for its closure period, which is now scheduled for March 15. Additionally, the partnership with Axis Bank aims to ensure continuity of Paytm’s popular services. crisis.
Bernstein analysts see the extended deadline for Paytm Payments Bank as a key facilitator for seamless transition of accounts. He considers the ability of Paytm’s merchants to continue using QR codes, Soundbox and card machines as a “major positive”.
Citi analysts expect more banking partnerships like Axis’, and what they call a “significant positive for the ongoing business”. However, Citi maintained its “Sell” rating on the stock, while Bernstein maintained its “Outperform.”
big picture: Ongoing scrutiny and regulatory challenges underline the increasing scrutiny of fintech companies in India’s rapidly evolving digital finance landscape. Despite the pressures, Paytm’s recent maneuver highlights its efforts to weather the crisis and maintain its operational continuity.
(with inputs from agencies)
A government source told Reuters that although no Foreign Exchange Management Act violations were detected, the investigation highlighted lapses in compliance with Know Your Customer (KYC) norms and issues with generation of suspicious transaction reports. .
The source told Reuters there were issues with the bank not generating suspicious transaction reports, adding that the Enforcement Directorate was still exploring whether to lay charges for any potential violations.
why it matters
The inquiry follows regulatory action by the Reserve Bank of India (RBI), which halted acceptance of new customer funds into Paytm’s accounts, resulting in a significant 50% decline in Paytm’s share price since January 31, amounting to around Rs 3.1. There was a loss of billion dollars. In the shareholder’s property.
Jefferies Financial Group Inc. has put its analysis of Paytm on hold, citing the need to “manage” the situation, according to a Bloomberg report. The move marks Jefferies as the first significant international brokerage to suspend coverage on the troubled Indian fintech giant.
“Without a banking license, Paytm’s business model will now resemble that of pure payment service providers,” the Bloomberg report said. “Paytm’s focus will now shift to ensuring customer retention, and we believe it will draw down its Rs 85 billion ($1 billion) cash reserves to spend on retaining users,” the analysts said.
zoom in: Amid the turmoil, Paytm has managed to get a crucial extension of 15 days from the RBI for its closure period, which is now scheduled for March 15. Additionally, the partnership with Axis Bank aims to ensure continuity of Paytm’s popular services. crisis.
Bernstein analysts see the extended deadline for Paytm Payments Bank as a key facilitator for seamless transition of accounts. He considers the ability of Paytm’s merchants to continue using QR codes, Soundbox and card machines as a “major positive”.
Citi analysts expect more banking partnerships like Axis’, and what they call a “significant positive for the ongoing business”. However, Citi maintained its “Sell” rating on the stock, while Bernstein maintained its “Outperform.”
big picture: Ongoing scrutiny and regulatory challenges underline the increasing scrutiny of fintech companies in India’s rapidly evolving digital finance landscape. Despite the pressures, Paytm’s recent maneuver highlights its efforts to weather the crisis and maintain its operational continuity.
(with inputs from agencies)
