RBI stops Paytm Payments Bank from onboarding new customers
The Reserve Bank of India on Friday stopped Paytm Payments bank from onboarding any new customers because of "material supervisory concerns" observed in the bank.
Issuing an official statement, the RBI said, "Reserve Bank of India has today, in the 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."
Paytm Payments bank has also been asked to appoint an IT audit firm to conduct a comprehensive system audit of its IT system, the statement added.
“Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing the report of the IT auditors,” the RBI further said.
Incorporated in 2016, the Paytm Payments Bank began its operations in May 2017. Paytm founder Vijay Shekhar Sharma owns 51% of the bank.
Friday's action comes two days after several reports said that the Paytm Payments Bank may approach the RBI for a small finance bank licence by June.
In December last year, the bank had received the RBI's approval to function as a scheduled payments bank, helping it to expand financial services operations.
And in November 2021, Paytm's IPO failed to make an impact in the stock market debut, casting a shadow over the prospects of other technology firms in India that were preparing to go public.