More worry for Paytm? Paytm Payments Bank may lose licence

Paytm Crisis: The decision comes after repeated instances of failed due diligence on the part of Paytm Payments Bank Limited, the report added.

Published on: Mar 4, 2024, 10:30:02 IST

By HT News Desk

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The Reserve Bank of India (RBI) may revoke banking licence of Paytm Payments Bank Limited (PPBL) with less than two weeks to go for central bank's deadline to cease operations, the Hindu Business Line reported. If this happens, it would be the first time in over 20 years that the RBI would take such an action. The report also claimed that an administrator might be appointed to oversee critical aspects of the bank's operations.

Paytm Crisis: A QR code for the Paytm digital payment system at a store in Mumbai, India. (Bloomberg)

The decision comes after repeated instances of failed due diligence on the part of Paytm Payments Bank Limited, it added.

“According to a few more sources, the regulator had sounded off the interested entities acquiring Paytm Payments Bank as they would be at their own risk and no dispensation on the compliance front would be extended to them. “This was a deterrent for any transaction to go through,” said the person quoted above,” it claimed.

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On March 1, Paytm's parent company One97 Communications (OCL) announced that its board approved discontinuation of several inter-company agreements with Paytm Payments Bank. OCL also terminated all its contracts with the bank.

The report also said that owing to RBI mentioning in the FAQ dated February 16 that no credits can be made to Paytm Payment Bank’s savings account, “the bank is unlikely to be in existence for long.”

This comes after the RBI imposed business restrictions on the bank citing repeated violations of norms on January 31. Then, the central bank barred PPBL from accepting fresh deposits and doing credit transactions after February 29 but the deadline was later extended to March 15.

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HT News Desk
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