RBI told Paytm Payments Bank to halt services by February-end
Reserve Bank of India has imposed restrictions on Paytm Payments Bank and barred the entity from offering incremental banking services effective March 2024, due to concerns regarding breach of and compliance with regulatory norms.
As per RBI, the Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action. The RBI, in March 2022, had directed Paytm Payments Bank to stop onboarding new customers and appoint an IT audit firm to conduct a comprehensive System Audit.
The disciplinary measures are seen as unprecedented for the financial services industry, and will affect the app’s users as well as the wider merchant community that uses the Paytm network for payment processing, wage disbursals and other quasi-banking functions.
Paytm Payments Bank Ltd. operates as a restricted bank that can take deposits but cannot lend. Billionaire Vijay Shekhar Sharma has a 51% stake in the bank and Paytm parent One 97 Communications Ltd. owns the remainder.
