March 11,2022: Reserve Bank of India has directed Paytm Payments Bank Ltd to stop onboarding new customers, effective immediately, citing “certain material supervisory concerns”, the central bank said. RBI has also asked One 97 Communications Ltd’s Paytm Payments Bank Action to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system.
“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,” it said in a statement Friday. “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,” the statement added.
Paytm Payments Bank said it is taking immediate steps to comply with RBI directions. “PPBL remains committed to working with the regulator to address their concerns as quickly as possible. We shall notify when we recommence the opening of new accounts after obtaining RBI approval,” it said in a blog Saturday. It further said new users can not sign up for new PPBL wallets or PPBL savings or current accounts, but they can register for UPI on its app.
Vijay Shekhar Sharma-led Paytm Payments Bank is a joint venture, with One97 Communications Ltd holding 49% stake while Paytm founder Sharma holds the remaining 51% stake. It claims to be the country’s largest digital bank with over 58 million account holders, according to the Paytm website. The company was reportedly expected to file for a small finance bank (SFB) licence by June, according to a Moneycontrol report. The bank is expected to complete five years of existence by June and hence would be eligible to apply for SFB license, the report added.
(Updates with statement from Paytm Payments Bank in third graf.)