Thousands of Indian bank accounts set up improperly: sources


money laundering

NEW DELHI: India’s central bank has found hundreds of thousands of accounts at Paytm Payments Bank created without proper identification and has passed the information on to the country’s financial crime fighting agency, three sources familiar with the matter said.

The Reserve Bank of India (RBI) is concerned that some of the accounts could have been used for money laundering, the sources said, speaking on condition of anonymity.

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As well as informing the Enforcement Directorate, the RBI has sent its findings to the ministry of home affairs and the prime minister’s office, they added.

“One 97 Communications Ltd. and Paytm Payments Bank have never been probed by the Enforcement Directorate,” a Paytm Payments Bank spokesperson said, referring to the bank’s parent company, the digital payments operator popularly known as Paytm.

“Some merchants using our platforms have been the subject of investigations and we answer authorities on this same as and when asked. We strongly refute money laundering allegations and caution you against speculation,” the spokesperson added.

The RBI, the Enforcement Directorate, finance ministry, home ministry, and prime minister’s office did not respond to requests for comment outside normal office hours.

The RBI on Wednesday ordered Paytm Payments Bank to wind down most of its businesses, including deposits, credit products and its popular wallet by Feb. 29.

It cited “persistent non-compliances and continued material supervisory concerns in the bank”, without giving details.

The Enforcement Directorate will probe Paytm Payments Bank if any evidence of illegal activity is found, Revenue Secretary Sanjay Malhotra told Reuters on Saturday.

Paytm’s stock plunged 36% in the two days following the RBI’s move against its bank, wiping $2 billion off its market value.

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Paytm’s founder Vijay Shekhar Sharma, a rags-to-riches star of the Indian startup scene, described the RBI’s action as a “speed bump” during a conference call with analysts on Thursday.

Two of the sources said multiple accounts at Paytm Payments Bank were linked to the same identification proof and that transactions in those accounts ran into millions of rupees.

An “unusually” high number of dormant accounts had also been found, one of them added.

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