- India’s Enforcement Directorate is investigating Paytm for potential foreign exchange violations.
- The new forex probe has hit Paytm stock and posed business continuity challenges.
- Paytm faces uphill battles to appease regulators and rebuild confidence.
Regulatory scrutiny
Paytm Payments Bank, the bank affiliate of leading fintech platform Paytm, is reportedly under scrutiny from India’s Enforcement Directorate for past foreign exchange transactions.
Sources revealed to Reuters that the regulatory agency is making preliminary inquiries regarding certain overseas remittances that may have violated forex regulations.
Ongoing Challenges
The investigation comes on the heels of an ongoing stock rout for Paytm, which has lost over 55% of its value since late January.
That is when the Reserve Bank of India (RBI) banned the bank from taking on new customers and ordered a freeze of old ones’ funds without approval, citing “material supervisory concerns.”
Paytm stock currently trades at around $3.90 per share. Despite founder Vijay Shekhar Sharma meeting with RBI officials to appeal the restrictions, Governor Shaktikanta Das has said there is little room to review the central bank’s decision.
Paytm response
In response to the foreign transaction probe reports, Paytm stated that it “does not undertake Outward Foreign Remittance.”
While the details and timeline of the Enforcement Directorate’s inquiry remain unclear, it has already been a difficult start to 2023 for Paytm as policymakers increase scrutiny around its business practices and partners.
The company must now simultaneously cooperate with investigators while working to regain the trust of regulators and investors.
