RBI asks Paytm Payments Bank to stop opening new accounts amid material supervisory concerns

MUMBAI: The RBI on Friday asked Paytm Payments Bank to stop opening new accounts amid "material supervisory concerns" observed in the bank.

The RBI has taken the decision in exercise of its powers under section 35A of the Banking Regulation Act, 1949.

The bank has also been directed to engage a firm for conducting a comprehensive audit of its IT system, the RBI said in a statement.

Onboarding of new customers by Paytm Bank will be subject to specific permission to be granted by RBI, after reviewing the report of the IT auditors, the press note added.

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

Billionaire Vijay Shekhar Sharma, founder of payments firm Paytm, owns 51 per cent 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.

Paytm Bank had 64 million savings accounts as of March 31, 2021, and over Rs 5,200 crore in deposits. It was also the largest Unified Payments Interface beneficiary bank, with the lowest technical decline rate among beneficiary and remitter banks.

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.

Published on: Friday, March 11, 2022, 11:04 PM IST