Paytm Claims It Has No Connection With The Chinese Loan Merchants Under ED Scanner

Paytm Claims It Has No Connection With The Chinese Loan Merchants Under ED Scanner

On Sunday, One97 Communications, a company that offers digital financial services under the brand Paytm, denied any affiliation with the companies under investigation by the Enforcement Directorate in relation to the Chinese loan app scandal.

No money that the Enforcement Directorate (ED) has blocked belonged to Paytm or any of the businesses in its group, according to Paytm.

“The ED has asked for more information regarding a few of the companies to which we offer payment processing solutions due to the current investigations against a certain group of dealers. We would like to make it clear that these businesses are autonomous and not part of our group “In a regulatory filing, Paytm stated.

In response to claims of irregularities in quick app-based loans “managed” by Chinese people, the ED disclosed on Saturday that it had searched six locations in Bengaluru for online payment gateways, including Razorpay, Paytm, and Cashfree.

The agency states that the searches, which started on Friday as part of the ongoing investigation, are still ongoing.

The money kept in “merchant IDs and bank accounts of these Chinese persons-controlled entities,” totalling Rs. 17 crores, was taken during the raids, the federal investigation agency claimed.

“The fact that ED has granted us authorization to freeze specific amounts from the Merchant IDs (MIDs) of a particular group of merchant organizations should be underlined (as mentioned by the ED in their press release). The fact that none of the money that has been ordered frozen belongs to Paytm or any other company in our group should also be emphasized “Paytm explained it.


A number of cases of credulous debtors killing themselves emerged from various states, prompting the ED to open an investigation under the criminal provisions of the Prevention of Money Laundering Act (PMLA).

The police claimed that these individuals were being coerced and harassed by these loan app (application) companies by having access to their personal information on their phones and employing aggressive tactics to threaten them.

It was stated that the corporations received all personal information from loan applicants when these applications were downloaded onto their phones, even if their interest rates were “usurious.”

According to the FBI, these payment methods were used to transfer the alleged criminal earnings from the case.

In reference to the current case, the ED claimed that the “modus operandi” of these businesses created “proceeds of crime” by using falsified Indians’ identification documents to create dummy directors.

Chinese people are in charge of and run these organizations.

The ED had stated that “it has come to our attention that the aforementioned businesses were conducting their alleged/illegal activity using a variety of merchant IDs/accounts held with payment gateways/banks.”

Paytm stated that it is fully assisting law enforcement and that all directives are being adhered to exactly.

In July and August, according to Paytm, it disbursed loans totalling Rs 4,517 crore, or 246% more.


Paytm, a leader in fintech, disbursed 6 million loans in July and August, a 246 per cent increase from the same period last year. The total amount of these loans disbursed increased by 484% to Rs 4,517 crore, or about $568 million.

Through the Paytm platform, financial institution partners have disbursed a total of loans, including both consumer loans and merchant loans.

The latest investigations report from Paytm states, “Our loan logistics, in cooperation with prominent lenders, shall continue to witness rapid expansion with payments via our platforms presently at a yearly operating margin of over Rs 29,000 crore ($3.6 billion) in Aug.”

Since we “continue to anticipate rapid expansion and upgrade potential in this area,” it added, we are focusing on the book’s excellence.

GMV and Offline Growth

The Vijay Shekhar Sharma-led company not only experienced consistent development in its credit business but also increased its offline payment capabilities, with 4.5 million devices altogether deployed at merchant establishments as of August 2022.

The significant device uptake, according to Paytm’s subscription as a service business model, “drives higher payment volumes, subscription revenues, as well as merchant loan distribution.”

Sharma made the following observation about the growing use of Paytm devices at the point of sale (PoS) in the company’s FY22 annual report: We observe that businesses understand the advantages of accepting digital payments instinctively, and they are increasingly willing to spend for infrastructure that facilitates secure and reliable digital payments.

It’s likely that this tendency will continue. He claimed that “consumers are integrating a growing amount of technology to their counters, like Paytm card readers or Soundbox, but it’s probable that this theme is expected to grow.”

The gross merchandise volume (GMV) of Paytm also showed a consistent rise. It increased by 72% YoY to Rs 2.1 lakh crore (almost $26 billion) for the two months that ended in August 2022. The increase of monthly transacting users (MTU) on the fintech platform contributed to this in part.

At the end of August, there were approximately 79 million MTUs or users who had completed at least one successful transaction in a calendar month, an increase of 40% from the same time last year. Consumer engagement, according to Paytm, is currently at its peak on the super-app.

Lending is one of our fastest-growing products, and payments are a significant revenue source. Paytm said in its annual report, “We have prioritized these companies in our resource allocation and tightened our focus on payments and distribution of lending products.


The Enforcement Directorate recently conducted a raid on Paytm’s Karnataka offices as part of its ongoing campaign against “illegal” rapid smartphone-based loans “managed” by Chinese individuals.

According to the federal investigation agency, it stole money totalling Rs 17 crore during the raids from “merchant IDs and bank accounts of these Chinese persons-controlled enterprises.”

In a statement released on Sunday, Paytm stated that it was completely cooperating with law enforcement and that it had no connection to the merchants being investigated by the ED.

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