India’s banking regulator is considering scrapping the license of Paytm Payments Bank Ltd.
The Reserve Bank of India (RBI) alerted the Directorate of Enforcement (ED) a few months ago about possible money laundering and know-your-customer (KYC) violations at Paytm, and the fintech services provider may lose its payments bank licence, given infringements flagged by the banking regulator over the past few years, people familiar with the matter .
The home ministry alerted the PM’s office about security concerns related to fund flows with links to China.
“Concerns have been flagged to ED… There was gross violation of anti-money laundering provisions and KYC norms,” said one of the persons aware of the details. “Several crores were being transferred in between multiple accounts without any KYC; lakhs of prepaid cards were issued sans any KYC, transferring large funds.” RBI had also uncovered data breaches, with information flowing between the payments bank and One 97 Communications.
In an order issued on January 31, RBI asked Paytm Payments Bank to stop all basic payment services through various platforms and technology railroads, including the Unified Payments Interface (UPI), Immediate Payment Service (IMPS), Aadhaar-Enabled Payment System (AEPS) as well as bill payment transactions, with effect from February 29.
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