Paytm Payments Bank barred by RBI from onboarding new customers
The Reserve Bank of India (RBI), in its latest order issued today, directed Vijay Shekhar Sharma-led Paytm Payments Bank Ltd to stop the onboarding of new customers. The central bank has said its action is based on “certain material supervisory concerns” observed in the bank. Sharma owns 51 per cent of Paytm Payments Bank.
The Paytm Payments Bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system, the RBI order said. “Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing a report of the IT auditors,” the central bank said.
“This action is based on certain material supervisory concerns observed in the bank,” the RBI said.
Incorporated in August 2016, Paytm Payments Bank had started operations in May 2017. It had opened its first branch in Noida. Paytm Payments Bank had received the RBI nod to operate as a “scheduled payments bank” in December 2021, which helped it expand its financial services operations.
The RBI’s action is coming on the heels of a poor listing show of Paytm parent firm One97 Communications after concerns were raised around its valuation.
Paytm Payments Bank had earlier said it received over 926 million UPI transactions in December, becoming the first beneficiary bank in the country to achieve this landmark.
In December 2020, the RBI had also barred HDFC Bank from launching any new digital products or services and issuing new credit cards over the issue recurring tech issues.