The Reserve Bank of India ordered Paytm Payments Bank Limited (PBBL) to halt onboarding new customers on Friday, March 11.
The Reserve Bank of India ordered Paytm Payments Bank Limited (PBBL) to halt onboarding new customers on Friday, March 11. The central bank also ordered an Income Tax (I-T) audit of Paytm’s affiliated firm.
“The Reserve Bank of India has today, in exercise of its powers, inter alia, under section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank Ltd to cease onboarding of new customers with immediate effect,” the RBI said in a statement. The bank has also been told to appoint an IT auditing firm to conduct a comprehensive system audit of its IT system.”
According to the statement, “Paytm Payments Bank Ltd’s onboarding of new clients will be subject to RBI’s particular clearance, which will be provided when the subjected I-T audit reports are reviewed.” The decision was issued in response to “certain material supervisory concerns noticed in the bank”.
Few days ago, MoneyControl reported that Paytm Payments Bank was planning to apply to the RBI for a small finance bank (SFB) licence in June.
The RBI granted the company licence to operate as a scheduled bank in December 2021. It was included in the RBI Act of 1934 (second schedule). The approval allowed Paytm Payment Bank to participate in request for proposal (RFP) issued by the government and large corporations, as well as fixed and variable rate repos. As a result, the bank is now able to participate in the government’s financial inclusion programme.
Paytm Payments Bank is a comprehensive platform of financing sources administered by Vijay Shekhar Shama’s Paytm. On the network, there are 300 million wallets, 220 million stored cards, and 55 million bank accounts in addition to the 100 million UPI handles.
Paytm Payments Bank was established in August 2016 and started operations in May 2017 from a Noida branch.
In December 2020, HDFC Bank was barred by the RBI from introducing any new digital products or services or issuing new credit cards unless it resolved recurring technical concerns.