Exclusive-India anti-fraud agency probing Paytm and bank unit over forex violations - sources
By Nikunj Ohri, Sarita Chaganti Singh and Shivangi Acharya
NEW DELHI (Reuters) -India's financial crime-fighting agency is investigating if platforms run by One 97 Communications, also known as Paytm, were involved in violations of foreign exchange rules, two senior government sources said.
The sources did not indicate what specific provisions of the Foreign Exchange Management Act (FEMA), which covers individual and corporate transfers overseas, were the subject of the investigation by the Enforcement Directorate.
The Enforcement Directorate has written to the central bank to seek data relating to transactions by Paytm's platforms, the two sources said.
One of the sources added that the investigators were not yet in contact with Paytm.
The sources declined to be named because they were not authorised to speak to the media.
The Enforcement Directorate and the Ministry of Finance, which oversees the agency, did not immediately respond to requests for comment.
A spokesperson for Paytm said that allegations regarding FEMA violations were "unfounded and factually incorrect".
The Reserve Bank of India on Wednesday ordered Paytm Payments Bank, an affiliate of Paytm, to wind down most of its businesses, including deposits, credit products and its popular digital wallets, by Feb. 29.
There had previously been no reports, however, of a government investigation of possible foreign exchange rule violations involving the platforms of the bank or its parent company.
The Paytm spokesperson said no overseas remittances of any kind could be initiated from bank accounts or wallet accounts at Paytm Payments Bank.
"We vehemently deny any speculations on alleged FEMA violations by One 97 Communications or its associate Paytm Payments Bank," the spokesperson said via email.
"The licence for payments banks restricts them from conducting operations related to outward remittances, which are exclusively permitted for large commercial banks in India."
(Reporting by Nikunj Ohri, Sarita Chaganti Singh, Shivangi Acharya; Editing by Edmund Klamann and David Evans)
