Paytm Payments Bank Barred from Onboarding New Customers by RBI With Immediate Effect
The RBI on Friday asked Paytm Payments Bank to stop opening new accounts amid "material supervisory concerns" observed in the bank.
"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 stop, with immediate effect, onboarding of new customers," the central bank said in a statement.
The bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system. [1]
Figure 1. Paytm Payments Bank Barred from Onboarding New Customers by RBI With Immediate Effect
Figure 1 shows the RBI has, today, in exercise of its powers, inter alia, under Section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank to stop, with immediate effect, onboarding of new customers,” it said. The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system, [2] the RBI said.
The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system. Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing report of the IT auditors. This action is based on certain material supervisory concerns observed in the bank," the press note added. [3]
The central bank had also issued a show cause notice to the firm dated July 29, 2021, stating that Paytm Payments Bank had committed an offence under the Payment and Settlement Systems Act, 2007 by submitting false information to RBI confirming completion of the transfer of Bharat Bill Payment Operating Unit business by One97 Communications to PPBL.
The RBI had imposed a penalty of Rs 1 crore on Paytm Payments Bank for the offence. In December 2020, the RBI had barred HDFC Bank from launching any new digital products or services and issuing new credit cards till the lender resolved recurring tech issues. [4]
References:
- https://gadgets360.com/apps/news/paytm-payment-back-new-customers-onboarding-ban-rbi-order-2817645
- https://indianexpress.com/article/business/companies/rbi-stops-paytm-payments-bank-from-opening-new-accounts-7815494/
- https://www.ndtv.com/business/rbi-bans-paytm-payments-bank-from-onboarding-new-customers-2817462
- https://www.firstpost.com/business/rbi-directs-paytm-payments-bank-to-immediately-stop-onboarding-new-customers-10453611.html
Cite this article:
Thanusri swetha J (2022), Paytm Payments Bank Barred from Onboarding New Customers by RBI With Immediate Effect, Anatechmaz, pp. 206