Jobaaj Stories
Share of One97 Communications Ltd., the parent company behind Paytm, tumbled today morning after the Enforcement Directorate (ED) conducted raids at its offices along with the offices of two other payment aggregators.
On Saturday, the ED carried out raids at the offices of Paytm, Razorpay, and Cashfree as part of its investigation into the 'Chinese Loan App' case.
Tata play to file for IPO by September end, read now.
The case is that several alleged Chinese nationals developed money lending mobile apps, such as Krazy Rupees and Cash Master, which entered into agreements with NBFCs to lend money to gullible people. People opted for these loans since they were quick and easy to apply for. These loans carried exorbitant rates and were partnered with disproportionate processing fees. Moreover, these apps used oppressive tactics to retrieve their loans which have resulted in suicides.
These raids by the ED were launched at the companies' Bengaluru offices under the Prevention of Money Laundering Act (PMLA), 2002. The agency announced that it had seized a sum of Rs 17 crores from Merchant IDs and bank accounts of these allegedly Chinese entities.
"The modus operandi of these entities is that they use forged documents of Indians and make them dummy directors leading to generation of "proceeds of crime. It has come to notice that the said entities were doing their suspected/illegal business through various merchant IDs/accounts held with payment gateways/banks." The ED said.
Razorpay and Cashfree have announced that they were cooperating with the authorities and were providing the agency with whatever information they needed. Paytm issued a statement later than both payment aggregators, stating that it was not linked to any merchants in the case and that the funds frozen in the case did not belong to Paytm or any of its group entities.
"As a part of ongoing investigations on a specific set of merchants, the ED has sought information regarding such merchants to whom we provide payment processing solutions. We wish to clarify that these merchants are independent entities, and none of them are our group entities," Paytm said in a regulatory filing.
However, this did not stop investors from panicking as the stock of Paytm tanked. It had been steadily declining for the past 3 weeks as it witnessed a full gap down opening today as it opened at Rs 700 per share, 3.7% below Friday's closing. It declined 2.5% today as it currently trades around Rs 709 per share.
Article by Aman Agarwal.
This news piece is brought to you in association with Jobaaj.com
