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The Enforcement Directorate (ED) has launched a preliminary inquiry into the operations of Paytm, particularly focusing on its banking arm, Paytm Payments Bank. While no enforcement case information report has been filed yet, the investigation underscores heightened scrutiny surrounding the fintech giant.
Both the ED and the Reserve Bank of India (RBI) are actively probing the matter, with the RBI taking decisive action to address persistent non-compliances. The regulatory bodies are conducting thorough examinations to ensure adherence to banking regulations and safeguard customer interests.
An official clarified that the investigation falls within the purview of regulators, emphasizing that there will be no government interference in the process. The RBI has already initiated actions in the interest of customers, and the ED is closely analyzing documents provided by the RBI for any potential violations.
In response to regulatory inquiries, Paytm has affirmed its commitment to cooperation, pledging to provide necessary information and comply with regulatory requests. However, the company’s shares witnessed a significant downturn following these developments, hitting a fresh record low during early trading hours on Wednesday.
The decline in Paytm’s share price prompted Macquarie to downgrade One97 Communications, Paytm’s parent company, from ‘neutral’ to ‘underperform.’ The brokerage also revised its price target downward, signaling a bearish outlook for the stock.
Governor Shaktikanta Das of the RBI reiterated the regulatory stance, emphasizing that decisions regarding the actions taken against Paytm Payments Bank have been carefully considered. He indicated that there is minimal room for reconsideration, highlighting the commitment to maintaining regulatory integrity and protecting the interests of stakeholders.
As regulatory scrutiny intensifies and market sentiments react to unfolding developments, Paytm finds itself navigating a challenging landscape. The company’s response to regulatory inquiries and its ability to address compliance concerns will play a crucial role in determining its future trajectory in the fintech sector.
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