Paytm shares decline after Financial Intelligence Unit fines Paytm Payments Bank

Paytm parent One97 Communications' shares were under pressure in a special trading session on Saturday, March 2, after the Financial Intelligence Unit (FIU) imposed a penalty of Rs 5.49 crore on Paytm Payments Bank, the digital payments company's associate entity, for violations in reporting illegal money routed through its accounts. The One97 stocks closed 2.6 per cent lower at Rs 414.6 apiece on BSE. 

The FIU initiated a review of Paytm Payments Bank after information from law enforcement agencies about some entities engaged in illegal acts, including organising and facilitating online gambling, and routing proceeds through the bank, the Finance Ministry said in a statement. 

The Financial Intelligence Unit-India, under the Finance Ministry's Department of Revenue, is the national agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions to enforcement agencies, and its foreign counterparts.

"The money generated from these illegal operations, i.e. proceeds of crime, were routed and channelled through bank accounts maintained by these entities with the Paytm Payments Bank," the ministry added.

The penalty pertains to issues within a business segment that was discontinued two years ago, a spokesperson for Paytm Payments Bank said. The company has since enhanced its monitoring systems and reporting mechanisms to the FIU, the spokesperson added.

Last month, the RBI had asked Paytm Payments Bank to wind down operations by March 15 due to persistent compliance issues and supervisory concerns. Paytm had earlier said that it received notices for information and explanations from the authorities, including the financial crime fighting agency Enforcement Directorate, and was providing them the same.

With inputs from agencies