Paytm Payments Bank has been barred from Onboarding new users as per the Reserve Bank of India (RBI). Reserve Bank of India is reported to conduct a system audit. The decision has been made because of “some serious supervisory concerns noticed in the bank,” as per the central bank’s ruling.
“RBI has today, in the exercise of its power, inter alia, under section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank Ltd to halt, with immediate effect, onboarding of new customers,” the central bank’s decision read.
It further stated that the Paytm Payments Bank, founded by Vijay Shekhar Sharma, must hire an income tax (I-T) audit firm to conduct a thorough system audit of its IT system.
Paytm Faces Ban This For The Second Time
The Reserve Bank of India (RBI) has directed Paytm Payments Bank, the banking unit of fintech behemoth Paytm, to cease onboarding new customers for the second time since its establishment in 2015.
The decision comes as a shock to the payments giant, as Paytm Payments Bank was forced to suspend registering new users in August 2018 due to an RBI probe. The RBI then made some observations on how it (Paytm Payments Bank) acquires new customers and how it adheres to KYC regulations.
After the RBI raised concerns about Paytm senior executive Renu Satti’s abilities to head a banking services firm, Paytm was ordered to remove her as CEO of the payments bank. According to reports, the fintech firm was changing its account opening process to include ‘current accounts,’ which was a primary cause for the halt in onboarding new consumers.
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Paytm Received Permission in 2020
The company was given the authorization to set the groundwork for becoming a scheduled bank in August 2020. Paytm Payments Bank received permission to run as a Scheduled Bank in December 2021, which means it can now provide loans in addition to savings services.
The Reserve Bank of India recently fined the payments bank INR 1 crore for violating the Payment and Settlement Systems Act, 2007. (PSS Act). The RBI found that the company had given information that did not reflect the truth of the situation, implying that it had knowingly made false assertions.
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Paytm India’s First Beneficiary Bank to Process 926 million UPI Transaction
Paytm Payments Bank previously announced that it processed over 926 million UPI transactions in December, making it the first beneficiary bank in the nation to achieve so. Furthermore, it was revealed that between October and December of last year, it handled 2,507.47 million beneficiary transactions, compared to 964.95 million in the same quarter of 2020. This marks a year-over-year increase of 159.85 per cent (YOY).
Paytm Payments Bank was founded in August 2016 and started operating in May 2017 with a facility in Noida.
In August 2018, the RBI took similar proceedings against Paytm Payments Bank. At the time, the regulator had found infractions of the know your customer (KYC) requirements.
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