Paytm stock dips 3% after Enforcement Directorate raids its offices

• On Friday, the Enforcement Directorate (ED) raided premises of online payment gateways like Razorpay, Cashfree and Paytm.
• The searches were conducted at six premises in Karnataka's capital city and the probe is still ongoing.
• The premises of Razorpay, Cashfree Payments, Paytm Payment Services and entities controlled/operated by Chinese persons are covered in the search operation.

Shares of One 97 Communications, PayTM, slipped over 3% in the early trade after its premises were raided by the Enforcement Directorate (ED) last week.

The searches were conducted at six premises that belong to Razorpay, Cashfree Payments, Paytm Payment Services and entities controlled/operated by Chinese Persons in Bangalore and the probe is still ongoing.

Paytm was the only listed entity, amongst the latest searches, and its stock fell by ₹17 in early trade to ₹710 .

The company released a statement saying that the search by ED was conducted on a ‘specific set of merchants’.

“We are supporting law enforcement agencies, who are investigating a specific set of merchants. The authorities reached out to us with directions to provide certain information about these merchants under scrutiny, to which we promptly responded. We continue to co-operate with the authorities and remain fully compliant,” Paytm spokesperson said.

Paytm also clarified that none of the funds frozen by the Enforcement Directorate (ED) belongs to it or any of its group firms.

ED stated that the case is against numerous entities/persons in connection with their involvement in extortion and harassment of the public who had availed small amounts of loans through the mobile apps being run by those entities/persons.

“These entities are controlled/operated by Chinese Persons. The modus operandi of these entities is by using forged documents of Indians and making them as dummy directors of those entities, they are generating 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,” said ED in a press release.

The premises of Razorpay, Cashfree Payments, Paytm Payment Services and entities controlled/operated by Chinese Persons are covered in the search operation.

A few reports suggest that the ED initiated a probe after a number of instances of gullible debtors ended their lives with the police stating they were being coerced and harassed by these loan app (application) companies. These companies are accused of sourcing all personal data of the loan taker at the time downloading the app and later misusing it.

During the search operation, it is noticed that the said entities were generating proceeds of crime through various fake merchant accounts. Further, an amount of ₹17 crore was seized in merchant IDs and bank accounts of these Chinese persons-controlled entities.


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