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RBI again bars Paytm Payments Bank from opening new accounts

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Mumbai, Mar 11 (PTI) The RBI on Friday asked Vijay Shekhar Sharma- promoted Paytm Payments Bank to stop opening new accounts amid “material supervisory concerns” observed in the bank.

This is the third time that Paytm Payments Bank is facing action from the banking regulator since its inception in May 2017. It has been prohibited from opening new accounts for the second time.

“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.

Sharma holds 51 per cent stake in Paytm Payments Bank (PPBL), while the remaining 49 per cent is held by Paytm.

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 reports of the IT auditors. This action is based on certain material supervisory concerns observed in the bank,” it said.

Paytm Payments Bank was incorporated in August 2016 and formally began its operations in May 2017 from a branch in Noida. As per the last disclosed numbers, PPBL had around 6.4 crore customers.

The RBI had in June 2018 too prohibited PPBL from onboarding new customers on account of supervisory concerns. The restrictions were lifted on December 31, 2018.

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. PTI PRS DP ABM ABM

This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.

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