Chinese loan app case: Paytm stock price drops 6% following ED raids on online payment gateways | Details

Shares of Paytm fell more than 6% in early trading on Monday amid ED raids on e-wallet companies in connection with Chinese lending apps. The stock fell 6.6% to Rs 681.20 per share in BSE intraday trading on Monday.

The stock was reacting to raids by the Enforcement Branch on six premises of online payment gateways. ED said on Saturday it had raided six premises of Razorpay, Paytm and Cashfree in Bangalore over alleged irregularities in app-based instant loans “controlled” by Chinese.

Meanwhile, reacting to the ED raids, Paytm said it was giving the investigative agency its full support. We support law enforcement investigating a specific set of merchants,” a Paytm spokesperson said.

“The authorities asked us to provide certain information about these traders under surveillance, to which we quickly responded. We continue to cooperate with the authorities and remain fully compliant,” he added.

Earlier, Cashfree Payments also said that its operations and onboarding processes adhere to PMLA and KYC guidelines, and will continue to do so. “We have extended our diligent cooperation to ED operations, providing them with required and necessary information,” he said.

Earlier, the federal investigative agency said that during the raids, it seized 17 crore rupees of funds kept in “trader IDs and bank accounts of these entities controlled by Chinese persons”.

“It may be noted that the ED has asked us to freeze certain Merchant Identifier (MID) amounts of a specific set of Merchant Entities (as mentioned by the ED in its press release). It may further be noted that none of the funds ordered to be frozen belong to Paytm or any of our group companies,” Paytm said.

The ED has launched an investigation under the criminal sections of the Prevention of Money Laundering Act (PMLA) after a number of cases of gullible debtors ending their lives emerged in various states, police stating that they were coerced and harassed by them. lending application (app) companies by posting their personal data available on their phones and adopting heavy-handed ways to threaten them.

It has been alleged that the companies obtained all of the loan taker’s personal data when downloading these apps to their phones, even though their interest rates were “usurious”, news agency PTI reported.

The agency had said the alleged proceeds of crime in the case were routed through these payment gateways.

Speaking about the case in question, the ED said the “modus operandi” of these entities was that they used false documents of Indians and turned them into bogus directors leading to the generation of “proceeds of crime”.

“These entities are controlled/operated by Chinese people.”

“The said entities were noticed doing their suspicious/illegal activities through various merchant IDs/accounts held with payment gateways/banks,” the ED had said.
Paytm said it is cooperating fully with the authorities and that all actions of the directive are being duly complied with.

Lance B. Holton