Chinese Loan App Case: Shares Of Paytm Slump 4 Per Cent In Early Trade After ED Raid

One97 Communications, which operates Paytm, on Sunday denied any link with the merchants that are under the ED scanner in the Chinese loan app case

Shares of digital financial services, One97 Communications that operates Paytm, suffered a 4 per cent decline in early trade on Monday, a day after the Enforcement Directorate (ED) raided its offices.

According to a report by the PTI, One97 Communications on Sunday denied any link with the merchants that are under the ED scanner in the Chinese loan app case. The company said that none of the funds frozen by the ED belonged to it or any of its group firms.

In a regulatory filing Paytm said, “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.”

The ED on Saturday said it has conducted raids on the premises at six locations of online payment gateways, such as Razorpay, Paytm, and Cashfree in Bengaluru over the alleged irregularities in instant app-based loans ‘controlled’ by Chinese persons.

According to the report, the searches that started on Friday as part of an ongoing probe are still underway, the agency said.

The probe agency also said that during the raids, it seized Rs 17 crore worth of funds kept in "merchant IDs and bank accounts of these Chinese persons-controlled entities".

"It may be noted that ED has instructed us to freeze certain amounts from the Merchant IDs (MIDs) of a specific set of merchant entities (as mentioned by the ED in their press release). It may be further noted that none of the funds, which have been instructed to be frozen belongs to Paytm or any of our group companies," Paytm said.

The ED initiated a probe under the criminal sections of the Prevention of Money Laundering Act (PMLA) after a number of instances of gullible debtors ending their lives came to the fore from various states, with the police stating they were being coerced and harassed by these loan app (application) companies by publicising their personal details available in their phones and by undertaking high-handed methods to threaten them.

At 12.30, Paytm recouped some its early morning losses. The company was trading down 2.45 per cent at Rs 709.70 apiece on the Sensex on Monday.