Fintech firm Paytm on Monday quashed a media report about Enforcement Directorate probing the firm and its unit Paytm Payments Bank Ltd (PBBL) for violations of foreign exchange laws.
Probe into Paytm has widened with the ED investigating violations of foreign exchange laws, days after Reserve Bank of India asked the platform's banking unit to halt business after February 29, reported Reuters on Monday, citing sources.
Enforcement Directorate has sought data from RBI, two sources familiar with the matter told Reuters. They did not indicate what specific provisions of the Foreign Exchange Management Act, which covers both individual and corporate transfers overseas, were the subject of the investigation, the report said.
In a stock exchange filing, One97 Communications Ltd (OCL), the parent firm of Paytm, said it denies reports of investigation or violation of Foreign Exchange rules by the Company or its associate PBBL.
"To address recent misinformation, factual inaccuracies, and speculation, One 97 Communications Limited would like to set out the Company’s position and directly address rumors in the recent misleading media reports about the Company. This filing is done in the interest of transparency, and protecting our reputation, customers, shareholders, and stakeholders from being influenced by unwarranted and speculative stories. We will continue to post such clarifications, as required," said OCL.
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"The Company filed a specific clarification yesterday, categorically denying any investigation by the Enforcement Directorate on OCL, our associates and our management. We have since seen additional media reports making baseless speculations about investigations of the Company or its associate Paytm Payments Bank Limited (PPBL) for violation of foreign exchange rules. We would like to reiterate that the Company and its associate Paytm Payments Bank Limited are not the subject matter of any such investigation. Such media reports are entirely misleading, baseless and malicious, which harm the interests of all our stakeholders," added OCL.
Shares of One 97 Communications Ltd, which owns Paytm brand, fell by another 10 per cent to hit its lower circuit limit, as investors continued to dump the stock following the RBI’s crackdown.
The stock tanked 10 per cent to Rs 438.35 — its lowest trading permissible limit for the day — on the BSE.
It plummeted 9.99 per cent to hit its lower circuit limit of Rs 438.50 on the NSE.
In three days, the stock has tumbled over 42 per cent, wiping out Rs 20,471.25 crore, from its market valuation.
"Top fintech players like Paytm should adhere to rules and regulations set by the regulator," Vivek Joshi, secretary of the department of financial services, told Reuters when asked for comment.
The Hindu Business Line newspaper reported on Monday that Paytm is in exploratory talks with HDFC Bank and Jio Financial Services to sell the digital wallets business housed under Paytm Payments Bank.
State Bank of India, India's largest lender, said on Saturday that it was extending services to merchants and retailers through its payments subsidiary, SBI Payments Services, in response to the uncertainty around Paytm.
"We are ready for them," SBI Chairman Dinesh Kumar Khara said. "We are quite open in terms of coming to the support of the merchant community and we will be more than happy to provide them PoS (Point of Sales) machines."