Chinese loan app case: Paytm share price falls 6% over ED raids on online payment gateways | Details

Shares of Paytm dropped over six per cent in the early trade on Monday amid ED raids on e-wallet firms in connection with Chinese loan apps. The stock fell by 6.6% to Rs 681.20 per share in BSE intraday trade on Monday.  

The stock was reacting to Enforcement Directorate raids at six premises of online payment gateways. The ED on Saturday said it conducted raids at six premises of Razorpay, Paytm and Cashfree in Bengaluru over alleged irregularities in instant app-based loans "controlled" by Chinese persons.  

Meanwhile, reacting to the ED raids, Paytm said they are providing every support to the investigating agency. We are supporting law enforcement agencies, who are investigating a specific set of merchants," said a Paytm spokesperson.  

“The authorities reached out to us with directions to provide certain information about these merchants under scrutiny, to which we promptly responded. We continue to cooperate with the authorities and remain fully compliant,” he added. 

Earlier, Cashfree Payments also said their operations and on-boarding processes adhere to the PMLA and KYC directions, and they will continue to do so. "We extended our diligent co-operation to the ED operations, providing them the required and necessary information,” it said. 

Earlier, the the federal probe agency said that during the raids, it seized Rs 17 crore worth of funds kept in "merchant IDs and bank accounts of these Chinese persons-controlled entities. 

"It may be noted that ED has instructed us to freeze certain amounts from the Merchant IDs (MIDs) of a specific set of merchant entities (as mentioned by the ED in their press release). It may be further noted that none of the funds, which have been instructed to be frozen belongs to Paytm or any of our group companies," Paytm said.  

The ED initiated a probe under the criminal sections of the Prevention of Money Laundering Act (PMLA) after a number of instances of gullible debtors ending their lives came to the fore from various states, with the police stating they were being coerced and harassed by these loan app (application) companies by publicising their personal details available in their phones and by undertaking high-handed methods to threaten them. 

It was alleged that the companies sourced all personal data of the loan-taker at the time downloading of these apps on their phones, even as their interest rates were "usurious", reported news agency PTI. 

The agency had said the alleged proceeds of crime in the case were routed through these payment gateways. 

Talking about the instant case, the ED said the "modus operandi" of these entities was that they use forged documents of Indians and made them dummy directors leading to the generation of "proceeds of crime". 

"These entities are controlled/operated by Chinese persons." 

"It has come to notice that the said entities were doing their suspected/illegal business through various merchant IDs/accounts held with payment gateways/banks," the ED had said. 
Paytm said that it is fully cooperating with the authorities, and all the directive actions are being duly complied with.