RBI bans Paytm Bank from onboarding new customers

New Delhi, March 11

The Reserve Bank of India (RBI) on Friday asked Paytm Payments Bank to stop opening new accounts amid “material supervisory concerns” observed in the bank.

“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,” the central bank said in a statement.

Supervisory concerns

• The action is based on certain material supervisory concerns observed in the bank, the RBI said
• Paytm Payments Bank was incorporated in August 2016 and formally began its operations in May 2017 from Noida
• In December 2020, the RBI had barred HDFC Bank from launching new digital products and issuing new credit cards till the lender resolved recurring tech issues

The bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system.

“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. This action is based on certain material supervisory concerns observed in the bank,” it said.

Paytm Payments Bank was incorporated in August 2016 and formally began its operations in May 2017 from a branch in Noida.

In December 2020, the central bank had barred HDFC Bank from launching any new digital products or services and issuing new credit cards till the lender resolved recurring tech issues. — with PTI inputs