The Reserve Bank of India (RBI) has asked Paytm Payments Bank Ltd to stop the onboarding of new users.
According to the order issued by the central bank, it was said that the decision is based on “certain material supervisory concerns observed in the bank”.
The order of the central bank said: “The RBI today, in exercise of its power, inter alia, under section 35A of the Banking Regulation Act, 1949, has notified the Paytm Payments Bank Limited, with immediate effect, to include new customers. instructed to stop. ,
It has also categorically stated that Vijay Shekhar Sharma-led Paytm Payments Bank should also hire an Income Tax (IT) audit firm to conduct a full system audit of its IT systems.
Additionally, the order authorized by Chief General Manager, Yogesh Dayal states that the induction of new customers of Paytm Payments Bank Ltd will be subject to specific permission from RBI after review of IT audit.
In December last year, the RBI allowed Paytm Payments Bank to operate as a “scheduled payments bank”, thereby expanding its financial services offering.
The RBI move comes after One97 Communications, the parent company of Paytm, had poor listing performance following valuation concerns.
Paytm Payments Bank has earlier said that it received over 926 million UPI transactions in December, making it the first beneficiary bank in the country to do so. Furthermore, it was reported that it processed 2,507.47 million beneficiary transactions between October and December last year, compared to 964.95 million in the same quarter in 2020. This represents a year-on-year (YOY) growth of 159.85%.
Paytm Payments Bank was established in August 2016 and started operations in May 2017 from its Noida branch.
RBI took similar action against Paytm Payments Bank in August 2018. The regulator had pointed out violation of Know Your Customer (KYC) norms at that time.
According to reports, the RBI was particularly unhappy with the strong relationship between Payments Bank and its parent company, One97 Communications Ltd.
At the time, it was reported that Paytm Payments Bank had failed to meet the criteria of Rs 100 crore net worth and was crossing the Rs 1 lakh deposit limit per account for payments banks at that time, as per RBI’s guidelines. According to one answer. Right to Information Act Petition.
RBI has taken similar action against HDFC Bank in December 2020. The bank was prohibited by the central bank from introducing any new digital products or services or issuing new credit cards unless it addressed recurring technical concerns.
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