Banks hesitant to accommodate Paytm nodal accounts

With lower than a month left emigrate nodal accounts of One97 Communications Ltd and Paytm Funds Providers Ltd from Paytm Funds Financial institution, a recent layer of problem appears to have hit One97 Communications, which homes the Paytm model and its group entities. In keeping with sources, a number of allegations of regulatory non-compliances have surfaced towards Paytm and its group entities within the latest days inflicting banks to show cautious about housing Paytm’s nodal accounts.

Opening a recent nodal account with a financial institution would require the client to adjust to KYC or know your buyer norms. In case of Paytm which is a company entity, banks would additionally run assessments on whether or not any anti-money laundering (AML) associated points have surfaced within the entity as a part of KYC checks. Though not one of the allegations pertaining to AML are underneath investigation or these fees have been confirmed, mere suspicion of AML non-compliance is satisfactory for banks to reject an entity’s software for opening new accounting citing KYC deficiencies.

Paytm spokesperson denied the identical. “Over the past two years, Paytm has been working with a number of third-party main banks. We’re increasing these relationships, and they’re progressing positively,” the spokesperson replied to an e-mail despatched in search of feedback.

Room for suspicion

Nonetheless, bankers say that after there’s room for suspicion, banks might look forward to a remaining consequence or clarification to return via from the investigation businesses to proceed with firm and /or its group entities.

“KYC-related points are very critical features for banks to take note of, particularly when it’s a high-profile case. Non-compliance of KYC attracts financial penalties from the RBI and there’s a lot of regulatory investigation round it as effectively,” mentioned a senior banker of a giant financial institution.

A nodal account is a particular inside checking account just like a present account which is opened for companies which are intermediaries and includes connecting clients and distributors. For banks, nodal accounts is a meaty supply of float earnings and therefore banks are forthcoming in opening these accounts typically. “Nonetheless, in Paytm’s case, the price of doing enterprise might exceed the benefits underneath the present circumstances,” mentioned a high official of a personal financial institution.

On February 1, Vijay Shekar Sharma, founding father of One97 Communications, instructed analysts that the corporate is working with numerous banks and Paytm Funds Financial institution was one of many key banks. “From right here on, we’re clear that we’ll work with numerous different banks and never Paytm Funds Financial institution,” he mentioned on the analyst name.