One97 Communications, a provider of digital financial services that goes by the Paytm name, denied having any connection to the businesses being investigated by the Enforcement Directorate in connection with the Chinese loan app issue on Sunday.
Paytm claimed that none of the money the Enforcement Directorate (ED) had frozen belonged to it or any of the companies in its group.
The ED announced on Saturday that it had conducted searches at six online payment gateway locations in Bengaluru, including Razorpay, Paytm, and Cashfree, in response to allegations of irregularities in fast app-based loans “managed” by Chinese individuals.
According to the agency, the searches that began on Friday as part of the continuing investigation are still in progress.
“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.
“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 launched an investigation under the criminal provisions of the Prevention of Money Laundering Act (PMLA) after a number of cases of credulous debtors taking their own lives emerged from various states, with the police claiming they were being coerced and harassed by these loan app (application) companies by making their personal information available in their phones and using aggressive tactics to threaten them.
Even if their interest rates were “usurious,” it was claimed that the corporations obtained all of the loan applicant’s personal information at the time these applications were downloaded into their phones.
The agency said that these payment methods were used to transfer the case’s purported criminal gains. Paytm said that it is fully collaborating with the law enforcement and that all instructions are being followed to the letter.