new Delhi: Paytm Payments Bank on Monday said a report claiming data leaked to Chinese companies was “false and sensational” after RBI directed it to stop opening new accounts. Paytm Payments Bank said that it is fully compliant with the RBI’s data localization norms and the entire data of the bank remains in the country.
Last week, the RBI directed Vijay Shekhar Sharma-promoted Paytm Payments Bank Ltd (PPBL) to stop opening new accounts amid “material supervisory concerns” observed at the bank.
A recent Bloomberg report that claims data leaked to Chinese companies is false and sensational.
Paytm Payments Bank is proud to be a fully domestic bank, fully compliant with RBI’s directives on data localization. All bank data resides in India.
— Paytm Payments Bank (@PaytmBank) 14 March 2022
Paytm Payments Bank said that this moratorium will not affect any existing customers of Payments Bank. However, users cannot sign up for Payments Bank’s service until further notice. Meanwhile, existing customers can continue to transact on the Paytm platform.
“All the data of the bank is within the country. We are true believers of Digital India initiative and are committed to promote financial inclusion in the country,” PPBL said in a statement as quoted by news agency PTI.
The Reserve Bank of India (RBI) has ordered an IT audit of Paytm Payments Bank. IT audit means that the company’s IT infrastructure i.e. software is capable of bearing the burden of many customers, what are the flaws in it and why are they coming, all these will be investigated.
According to the statement issued by the RBI, Paytm Payments Bank will have to first take the permission of RBI to add new customers, then it can add new customers with itself. The bank will be allowed to add new customers only after reviewing the IT audit report of the central bank.
“Bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT systems. Addition of new customers by Paytm Payments Bank Ltd. Specific permission to be given by RBI after review of the IT report auditors,” RBI was quoted as saying by news agency ANI.
Shares of PPBL’s parent organization, One97 Communications, were pegged after a report on BSE and National Stock Exchange stated that Paytm Payments Bank Ltd’s servers were offering data to China-based entities that indirectly Holds stake in Paytm Payments Bank.
The organization has rejected the report.
Financial technology company Paytm’s founder and CEO, Vijay Shekhar Sharma, holds a 51% stake in Paytm Payments Bank (PPBL), while the remaining 49% is held by One97 Communications.
China-based Alibaba Group is the largest investor in One97 Communications and holds about 31% stake through its subsidiaries.
Shares of One97 Communications closed at Rs 675.35, down 12.84 per cent. The stock closed at Rs 680.40, down 12.21 per cent on the NSE.
(with PTI inputs)