ED initiates inquiry against Paytm Payments Bank, Surprisingly FIIs dumped Rs 7K-crore worth Paytm shares before RBI ban
First Things First, Vijay Shekhar Sharma’s Passport Must Be Confiscated immediately. It looks that our government is in no mood to learn from its past mistakes done with other economic offenders and willing to give a free pass to Paytm Founder Vijay Shekhar Sharma.
Just 7 days back on February 7, 2024 Inventiva reported that ED & CBI Action On PayTM Is Inevitable and within 7 days ED has initiated enquiry on Paytm, Looks as if ED has given a perfect valentine gift to Vijay Shekhar Sharma – The Founder Of PayTM.
ED has initiated its probe on paytm, despite Vijay Shekhar Sharma claim in Media that No ED Or CBI action would be taken on Paytm.
Inventiva had been long requesting the SEBI, Finance Ministry & RBI along with other relevant departments to Confiscate Vijay Shekar Sharma passport so that he do not elope to evade the actions from ED.
Lets have a look at what is happening with Paytm
The Enforcement Directorate (ED) on Wednesday initiated its inquiry against Paytm Payments Bank
The investigating agency had first sought more information from the RBI, which ordered the Paytm Payments Bank to wind down much of its business by Feb. 29, citing persistent and serious supervisory concerns. However, Paytm did not confirm the development officially.
Since the central bank’s order, Paytm has lost nearly 55 per cent of its market value. The company’s shares fell nearly 10 per cent on Wednesday.
Vijay Shekhar Sharma also met RBI Governer & Finance Minister Nirmala Sitharaman but it has been cleared that Government & RBI is in no mood to spare Vijay Shekhar Sharma this time. RBI Governer Shaktikanta Das has very clearly stated that “There is no review of the decision (on Paytm Payments Bank)”
Earlier on February 9, the Board of One 97 Communications Limited, which operates Paytm, announced the formation of a Group Advisory Committee chaired by former SEBI Chairman M Damodaran, to work with the Board in further strengthening compliance, and regulatory matters.
In an official release, the company said that the Committee includes veteran professionals like MM Chitale, former president of the Institute of Chartered Accountants of India (ICAI) and a former governing Council Member of Banking Codes and Standards Board of India nominated by RBI.
Since the time RBI has taken action on Paytm several top management executives have resigned from PayTM giving one or more reasons to save themself from the probe.
Many on Dalal Street have been dumping Paytm shares since the Reserve Bank of India (RBI) ordered its unit Paytm Payments Bank to stop many of its activities, citing non-compliance and supervisory concerns. But call it premonition or foresight, foreign institutional investors (FIIs) sensed trouble brewing for the fintech major back in the December quarter itself and were smart enough to dump the stock then.
According to one report Axis Bank MD & CEO Amitabh Chaudhry said that Axis Bank open to working with Paytm if RBI permits, sounds like Amitabh Chaudhry is the next Khatro ke Khiladi.
Notorious History of Axis Bank
Let Inventiva remind you that in november 2023 The Reserve Bank of India imposed a monetary penalty of ₹90.92 lakh on Axis Bank Ltd for non-compliance with certain directions issued by the apex bank on ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’, ‘Loans and Advances – Statutory and Other Restrictions’, ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Code of Conduct for Opening and Operating Current Accounts’.
The Reserve Bank said after examination of the Risk Assessment Report/Inspection Report pertaining to ISE 2022, Scrutiny Report and all related correspondence in that regard, it observed that the Axis Bank failed to preserve records pertaining to the identification of customers and their address in certain cases, and made persistent calls to some of the customers.
Axis Bank is the same bank whose bank managers were booked by Income Tax Department & CBI during demonetization
The Central Bureau of Investigation (CBI) has registered a case against the branch manager, two officials of Axis Bank, Memnagar Branch in Ahmedabad along with nine other persons.
It is alleged that the officials of Axis Bank, Memnagar Branch had misused their official position and allowed unauthorised transactions to shell companies between November-December 2016.
The bank officials had allegedly violated the KYC (Know Your Customer) guidelines in aiding the transactions. They have also been booked under the Anti-Money Laundering Act.
It is believed that at least three groups of cash handlers deposited around Rs.100.57 crore in about 25 shell companies’ accounts maintained with Axis Bank, Memnagar Branch.
The profiles of companies and the people depositing such huge amount of money were found to be non-commensurate with the deposits.
The enforcement directorate (ED) on Monday arrested two officials of Axis Bank Ltd in Delhi and seized 3kg of gold, saying they were helping money launderers convert banned currency notes into gold, the ED said.
According to ED officials, the conversion of banned currency notes involved individuals using old currency notes to buy gold at Rs45,000-50,000 per 10gm—almost 30-40% higher that the current market price of Rs30,000-32,000. The money was laundered through banking channels.
Money was deposited in accounts that belonged to shell or dummy companies. These firms then transferred the funds to another account which also belonged to a shell company. The money was finally given to bullion dealers to buy gold bars, and these were then handed over to the original purchasers.
“Shell companies were used for depositing Rs39 crore in 10 days, post-demonetisation in connivance with employees of Axis Bank. The bank employees were using unverified documents and were exchanging notes in bulk; amounting to several lakhs,” said a senior ED official.
The cash deposits were in instalments of Rs90-99 lakh to avoid detection and reporting to government agencies.
“In several instances more than one such cash deposit in a day were made in these accounts,” said the official.
ED attaches over Rs 2 crore assets in Axis Bank PMLA case
The ED Monday said it has attached assets worth over Rs 2 crore in connection with a money laundering case registered against former officials of an Axis Bank branch here and others, post the 2016 demonetisation exercise. In a statement, the agency said it has issued a “provisional attachment order under the Prevention of Money Laundering Act (PMLA), attaching movable and immovable properties worth Rs 2,95,92,351 of Puneet Jain, Hemraj Singh, Vinod Deshmukh, Rajeev Singh Kushwaha, Mehfooz Khan, Pravesh Kumar Gandhi and others in the Axis bank demonetised currency conversion case”.
The Enforcement Directorate (ED) had filed a criminal case in the matter based on an FIR filed by the Delhi Police after it seized Rs 3.70 crore in old notes of Rs 1,000 in 2016. Demonetisation of old Rs 1,000 and Rs 500 notes was announced by Prime Minister Narendra Modi on November 8, 2016.
“Investigation revealed that on announcement of demonetisation policy, accused Mohit Garg, Nitin Gupta, Vineet Gupta, Shobhit Sinha and Axis bank officials used shell companies like M/s Beagle Marketing, M/s Sunrise Trading Co, M/s R D Traders, M/s Himalayan Traders of Rajeev Singh Kushwaha for illegal exchange of demonetised currency of Vinod Deshmukh, Puneet Jain, Hemraj Singh, Pravesh Kumar Gandhi and others,” it said
I-T department discovers 44 fake accounts at Axis Bank’s Chandni Chowk branch
A survey conducted by the Income-Tax department at the Chandni Chowk branch of Axis Bank on Friday lead to the discovery of 44 fake accounts, news agency ANI reported. Over Rs 100 crore was allegedly found in these accounts. The bank allegedly did not follow KYC norms set by the RBI. The branch authorities are currently being questioned by police.
Tax authorities claimed that since the demonetisation of high tender notes, over Rs 450 crores has been deposited into these accounts. “The department is checking the records of the bank as part of a survey operation. There are some instances under scanner where huge deposits have been made post the currency scarp and that is being probed,” officials said.
Not Just ED, CBI & Income Tax, Even SEBI Imposed Penalty On Axis Bank
SEBI imposes monetary penalty on Axis Bank for violating regulations
Market regulator Securities and Exchange Board of India (SEBI) announced on Thursday that it had imposed a Rs 5 lakh penalty on private lender Axis Bank for “violating regulations.”
SEBI said that it has fined Axis Bank under the provisions of section 15A(a) of the SEBI Act for its violation of provisions of regulation 27 of the Merchant Bankers (MB) Regulations.
in exercise of the powers conferred upon me under Section 15-I of the SEBI Act read with rule 5 of the Adjudication Rules, hereby impose a penalty of Rs. 5,00,000/–(Rupees Five Lakh only) on the Noticee viz. Axis Bank Limited – Merchant Banker, under the provisions of section 15A(a) of the SEBI Act for its violation of provisions of regulation 27 of the MB Regulations,” wrote Adjudicating Officer Suresh B Menon.
Menon added that he was of the view that the said penalty is commensurate with the default committed by Axis Bank.
The market regulator explained that it had conducted an examination into the Debt Capital Market operations of Axis Bank during the period August 2016 to August 2019. During the course of examination, it was observed that bank had failed to submit the details /information of the transactions relating to its acquisition of the securities to SEBI in respect to 9 public issuances of debt.
It was alleged that Axis Bank had violated the provisions of Regulation 27 of the MB Regulations and thus adjudication proceedings were initiated against the lender by SEBI.
Axis Bank itself has a long list of frauds, non-compliance, scams and has a habit of playing with Fire. With This Latest Episode Of AXIS Bank & PayTM, It Seems one devil is coming to save another.
We wish all the best to Axis bank and hope that Axis Bank Do not burn their hands this time.
