paytm: RBI, ED likely to turn up heat on mobile payment users violating Fema rules

The investigating agencies and Reserve Bank of India (RBI) are likely to turn up the heat on individuals and companies purportedly violating Foreign Exchange Management Act (Fema) and other norms on all mobile payment platforms.

ET has reliably learnt that the investigators want to zero in on possible violators with the help of Central Bank which has the necessary information pertaining to entities violating Fema and other norms, said people in the know.

As first reported by ET on Tuesday, the Directorate of Enforcement (ED) is likely to write to the Central bank seeking information pertaining to entities which may have committed similar violations on other mobile payment platforms as they allegedly have on Paytm Payments Bank, as claimed by RBI.

In its communication sent last week of November, RBI had shared information with ED of the entities which may have committed Fema and other violations. A top government official said that the information shared by RBI, seeking a Fema probe, pertained to the financial years from 2017-20.

The ED is likely to ask RBI to share the latest information of possible violators who may have violated Fema and other norms using Paytm Payments Bank so that they can be promptly brought to book.

“It would only help the investigating agencies to act promptly against purported violators if the Central Bank shares the latest information it has against suspicious transactions and entities. For it becomes slightly difficult for the investigators to trace the violators if the information is old”, said a senior government official. As per available information, the RBI and ED officials are likely to have a joint meeting to deliberate the issue.

The investigating agencies which will act in unison and share actionable information are the Enforcement Directorate, Financial Intelligence Unit (FIU) of the Finance Ministry and Income Tax Department.

Elaborating, the government official quoted above added “while money laundering charges will be probed by the ED, if any lapses are found on the part of mobile payment platforms penalties can be imposed by either the RBI or the FIU. Similarly, if ED discovers suspicious deposits made in wallets of platform payments in a bid to evade tax returns, the information of such entities can be shared with the Income Tax Department for requisite action”.

ET reported on Tuesday that ED has sought additional information from RBI on the alleged violation of the Fema by individuals and companies using Paytm Payments Bank.

The RBI had written to the ED in November last year informing it of the possible breaches, they said. Within 10 days of that, the ED wrote back to the RBI in December, seeking information on the “entities” that had allegedly violated Fema.