The Financial Intelligence Unit-India (FIU-IND) has levied a penalty of Rs 5.49 crore on Paytm Payments Bank Ltd (PPBL) for breaching its obligations under the Prevention of Money Laundering Act (PMLA). This move by the FIU-IND follows a series of concerns raised by the Reserve Bank of India (RBI) regarding persistent non-compliance and material supervisory issues within PPBL.
The Finance Ministry, in an announcement on Friday, highlighted the penalty imposed on PPBL, which is a subsidiary of One 97 Communications, the parent company of popular digital payment platform Paytm. The RBI’s scrutiny on PPBL’s operations has intensified, prompting the company’s board to approve the discontinuation of inter-company agreements with Paytm Payments Bank, aiming to reduce dependencies.
As part of the regulatory measures, the RBI has instructed Paytm Payments Bank Ltd to cease all deposits, credit transactions, and top-ups in customer accounts, prepaid instruments, and wallets by March 15. This directive indicates a stringent stance by the central bank to address compliance issues within the financial institution.
In a subsequent development, the RBI has also directed the National Payment Council of India (NPCI) to review One97 Communications’ request to become a Third-Party Application Provider (TPAP) for the continued operation of the Paytm application’s Unified Payments Interface (UPI).
Approval as a TPAP is essential for facilitating UPI-based payment transactions for customers. Presently, all UPI transactions on the Paytm app are routed through PPBL, the associate company of One97 Communications. This review by the NPCI signifies a pivotal moment for Paytm’s UPI services, as the company navigates regulatory hurdles and seeks to ensure compliance with regulatory frameworks.
The recent developments underscore the growing scrutiny and regulatory pressures faced by Paytm Payments Bank Ltd and its parent company, One 97 Communications. As the deadline approaches for the halt on transactions mandated by the RBI, stakeholders are closely monitoring the company’s efforts to address compliance issues and maintain uninterrupted services for its vast user base.
