Chinese loan app scam: Paytm shares fall 6 per cent after ED raids

Following the weekend search of Paytm's Bengaluru offices by the Enforcement Directorate in connection with the Chinese lending app issue, shares of Paytm's parent company, One 97 Communications Ltd, dropped on Monday.

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After the Enforcement Directorate (ED) announced on Saturday that it had been searching multiple locations in Bengaluru related to Paytm, Razorpay, and Cashfree since Friday in connection with a money laundering case against some instant app-based loan dishing entities "controlled" by Chinese persons, Paytm stock dropped on Monday.

The centrel agency said that it had confiscated Rs 17 crore from the "merchant IDs and bank accounts of these Chinese persons-controlled organisations" during the searches.

Paytm's stock dropped by almost 6% in premarket trading, and it was down another 3% at 9:30 AM (IST) on the BSE, when it was trading at Rs 705.40. Stocks dropped to a low of Rs 681.20, or 68% below their issue price of Rs 2,150. Compared to the 0.6 percent decline in the benchmark Sensex over the same time frame, the stock has wiped off more than 45 percent of investors' capital so far in 2022.

As a response, the four companies informed the government agency that they were willing to cooperate with it. Earlier, a Paytm representative claimed the company was cooperating with the authorities in their investigation of a select group of retailers.

However, in a filing with regulators on Sunday, the business said that the ED had not frozen any of its assets.