The Financial Intelligence Unit, as reported on Friday, has levied a substantial penalty of ₹5.49 crore on Paytm Payments Bank for alleged involvement in money laundering activities, according to statements from the Ministry of Finance. This significant action represents a fresh setback for the banking institution, following the Reserve Bank of India’s directive on January 31, prohibiting it from accepting new deposits starting February 29, later extending the embargo to March 15.
The development unfolded shortly after One97 Communications, the parent company of Paytm Payments Bank, announced the discontinuation of inter-company agreements with the lending service, aiming to reduce dependencies within the organization. Citing sources from the finance ministry, it was revealed that illicit funds were channeled through bank accounts held with Paytm Payments Bank by entities engaged in unlawful activities.
The finance ministry disclosed that the Financial Intelligence Unit-India (FIU-IND) initiated a comprehensive review of Paytm Payments Bank following inputs from law enforcement agencies regarding certain entities and their network involved in various illegal pursuits, including orchestrating and facilitating online gambling. “The Financial Intelligence Unit-India (FIU-IND),… has imposed a monetary penalty of ₹5.49 crore on Paytm Payments Bank Ltd with reference to the violations of its obligations under the PMLA (Prevention of Money Laundering Act),” stated the ministry in an official statement. The penalty was imposed by the FIU on February 15, as per reports.
Responding to the penalty, a spokesperson for Paytm Payments Bank clarified, “The penalty relates to issues within a business segment that was discontinued two years ago. Since then, we have bolstered our monitoring systems and reporting mechanisms to the Financial Intelligence Unit (FIU).” On February 27, Vijay Shekhar Sharma resigned from his position as part-time non-executive chairperson of Paytm Payments Bank ahead of the March 15 deadline. Subsequently, the board of directors underwent reconstitution, with the appointment of individuals such as ex-Central Bank of India Chairman Srinivasan Sridhar, retired IAS officer Debendranath Sarangi, former Executive Director of Bank of Baroda Ashok Kumar Garg, and former IAS officer Rajni Sekhri Sibal.
“One97 Communications has been informed separately that Vijay Shekhar Sharma has also resigned from the Board of Paytm Payments Bank to facilitate this transition. PPBL (Paytm Payments Bank Ltd) has informed us that they will initiate the process of appointing a new Chairman,” stated One97 Communications in a regulatory filing.
