The Financial Intelligence Unit of the nation claims to have levied the fine following an examination of Paytm Payments Bank, which revealed companies engaged in illicit activities—such as online gambling—were using the bank's accounts to transfer money.

The fine "pertains to issues within a business segment that was discontinued two years ago," according to Paytm Payments Bank, which has since improved its monitoring procedures.

The fine is a result of the Reserve Bank of India's investigation into Paytm Payments Bank. The RBI has imposed severe restrictions on the unit due to noncompliance, which has caused a sharp decline in the parent company's share price.

In an attempt to calm the market and central bank, Paytm has now sought to terminate "various inter-company agreements" with the business bank.