‘Misleading and baseless’: Paytm on reports of foreign exchange violation probe

Embattled digital payments company Paytm has denied media reports claiming.

That the Enforcement Directorate (ED) is investigating it in connection with foreign exchange violations under the Foreign Exchange Management Act (FEMA). A Reuters report, quoting two senior officials, claimed that the ED is already probing the company, but there has been no formal communication thus far.

In a stock exchange filing, Paytm’s parent company, One97 Communications Limited (OCL), claimed that such reports are “entirely misleading, baseless and malicious”.

“The company (OCL) filed a specific clarification yesterday, categorically denying any investigation by the Enforcement Directorate on OCL, our associates and our management. We have since seen additional media reports making baseless speculations about investigations of the company or its associate Paytm Payments Bank Limited (PPBL) for violation of foreign exchange rules,” Paytm said.

“We would like to reiterate that the Company and its associate Paytm Payments Bank Limited are not the subject matter of any such investigation,” added the stock exchange filing. Paytm’s response comes amid uncertainty and speculation over the firm’s operations after the Reserve Bank of India (RBI) took strict regulatory action against its associate, Paytm Payments Bank.

The payments bank, where Paytm owns a 49 per cent stake, has been asked to stop key operations by the central bank from March 1, citing non-compliance and material supervisory concerns. While the company has clarified that it is working to move its operations to external banks, the shares of the company have taken a pounding on the stock market.

In just three trading sessions, Paytm’s stock has plunged nearly 43 per cent, translating into a market cap wipeout of Rs 20,500 crore. As the fate of Paytm Payments Bank remains uncertain after February 29, brokerages have expressed concern regarding its operations and analysts also feel that it could have a further impact on the company’s stock price.