BENGALURU: 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,” the central bank said in a statement.
“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 RBI had barred HDFC Bank from launching any new digital products or services and issuing new credit cards till the lender resolved recurring tech issues.
Billionaire Vijay Shekhar Sharma, founder of payments firm Paytm, owns 51% of Paytm Payments Bank.
The move comes months after One97 Communications, the payments bank’s parent, saw a dramatically underwhelming listing amid concerns around the company’s valuation.