India's Financial Intelligence Unit (FIU) on Friday imposed a penalty of 54.9 million rupees ($662,565) on Paytm's banking arm, Paytm Payments Bank, for alleged money laundering, the country's finance ministry said in a statement.

The FIU initiated a review of Paytm Payments Bank on the receipt of specific information from law enforcement agencies in respect of a few entities engaged in illegal acts, including organising and facilitating online gambling, the statement said.

"The money generated from these illegal operations proceeds of crime were routed and channelled through bank accounts maintained by these entities with the Paytm Payments Bank," the ministry said.

Based on the voluminous material available on record, it found that the charges against Paytm were substantiated, the ministry added.

Earlier, the Reserve Bank of India (RBI) asked Paytm Payments Bank to wind down operations by March 15 due to persistent compliance issues and supervisory concerns, triggering a meltdown in Paytm's stock.

It was not immediately clear if the finance ministry's actions were linked to the latest move by the RBI.

($1 = 82.8598 Indian rupees)

(Reporting by Nandan Mandayam and Sethuraman NR in Bengaluru; Editing by Sohini Goswami)