An Indian federal agency has reportedly conducted searches at some PayU and Paytm locations, with the latter being owned by One 97 Communications.
The agency, the Enforcement Directorate (ED), is the country’s financial crime fighting agency, Reuters reported Wednesday (Sept. 14), citing CNBC-TV18. A Paytm spokesperson told PYMNTS via email that the searches have to do with a matter that the company had already notified the Stock Exchange about on Sept. 4.
“As we have mentioned before, ED continues to seek information about certain merchants from various payment service providers, we have shared the required information,” the Paytm spokesperson said in the email.
PYMNTS has requested comment from PayU.
India’s ED had previously conducted searches at six locations in Bengaluru belonging to Razorpay, Paytm and Cashfree Payments, saying the searches were part of a probe against “illegal” instant smartphone-based loans, Mint reported Wednesday.
The ED also alleged that persons controlling merchant IDs and bank accounts and using forged documents had generated “proceeds of crime,” according to the report.
“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 in a statement, per Mint.
In One 97 Communications’ Sept. 4 letter to the Stock Exchange, Company Secretary and Compliance Officer Amit Khera wrote in response to the Sept. 3 searches by the ED, “As 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.
“It is hereby clarified that these merchants are independent entities, and none of them are our group entities. We are, and will continue to, fully cooperate with the authorities, and all the directive actions are being duly complied with.”
Learn more: Advisers Urge India’s Paytm Shareholders to Remove CEO
Last month, Paytm was facing pressure from a proxy advisory firm to oust its CEO Vijay Shekhar Sharma, with the firm arguing that Sharma may not be able to get the company to profitability.
“Once the confidence is lost in the ability of the senior management to make the right business decisions, it is quite natural that one should seek replacement of the same,” Abhay Agarwal, a fund manager at Piper Serica Advisors, said at the time.
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