Sources, on the condition of anonymity, said that the Reserve Bank had also received a complaint about Paytm Payments Bank for violation of the law made to prevent money laundering. The Reserve Bank found several irregularities in the audit of Payments Bank, including violations of anti-money laundering laws.
Action has been taken against Paytm Payments Bank for violation of regulatory rules and not paying attention to the warnings of the Reserve Bank (RBI) . Sources, on the condition of anonymity, said that the Reserve Bank had also received a complaint about violation of anti-money laundering law regarding Paytm Payments Bank.
Error in KYC process
According to sources, the Reserve Bank found several irregularities in the audit of the Payments Bank, which also included violation of the Prevention of Money Laundering Act. According to the Reserve Bank, the bank also did not check the KYC (Know Your Customer) documents properly. The Reserve Bank found that the company did not investigate the source of funds before adding clients. The source said, ‘The audit found that large-scale transactions took place through merchant accounts where proper KYC process was not followed to trace the source of funds.’
Transactions with other group companies
According to sources, the second issue was of ‘related-party transactions’ with other companies of Paytm group. The banking regulator found that the Payments Bank was not taking adequate steps to protect itself from conflict of interest. A source said, ‘The RBI was concerned about the autonomy of the Payments Bank due to the high level of interaction between Paytm Payments Bank and other group units and Paytm founder Vijay Shekhar Sharma indirectly controlling the bank’s key decisions and operations. Was also.’
Complex pattern of shareholding
Sources say that the Reserve Bank was also concerned about the complex ownership structure of Paytm Payments Bank. One97 Communications holds 49 percent stake in the bank, while 10 percent is held by the joint venture of Sharma and One97. Apart from this, Sharma also has control over One97 through shareholding and directorship. If sources are to be believed, the Central Bank had also warned about glitches in the IT system of the Payments Bank, but despite warnings, it could not be rectified.
