Taking immediate steps to comply with RBI directions: Paytm Payments Bank

Paytm Payments Bank on Saturday said it is taking immediate actions to comply with the direction of the Reserve Bank of India which has barred the company from opening new accounts amid “material supervisory concerns”.

This is the third time that Vijay Shekhar Sharma-promoted Paytm Payments Bank (PPBL) is facing action from the banking regulator since its inception in May 2017. It has been prohibited from opening new accounts for the second time.

“We are 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,” PPBL said in a blog.

Paytm Payments Bank was incorporated in August 2016 and formally began its operations in May 2017 from a branch in Noida. As per the last disclosed numbers, PPBL had around 6.4 crore customers.

Sharma holds 51 per cent stake in Paytm Payments Bank (PPBL), while the remaining 49 per cent is held by Paytm.

RBI has also directed to appoint an IT audit firm to conduct a comprehensive system audit of PPBL’s IT system.

PPBL in the blog said that existing customers can continue to operate banking and digital payments services without interruption.

“The savings of existing users in their PPBL account, their fixed deposits with partnered banks and the balance maintained in their Paytm Wallet, FASTag or Wallet Card and UPI services are completely safe and functional.

“Any new users coming to the Paytm app can create Paytm UPI handles, and link them to their existing PPBL account or to other bank accounts. However, new users cannot, until further notice, sign up for new PPBL wallets or PPBL savings or current accounts,” PPBL said.

Addressing to the customers, the blog said that the bank remains fully committed to maintaining high standards of compliance and continues to promote digital banking services for all.

“Rest assured your accounts are fully functional and you can continue to enjoy our services,” PPBL said.

The RBI in June 2018 had prohibited PPBL from onboarding new customers on account of supervisory concerns. The restrictions were lifted on December 31, 2018.

The central bank had also issued a show cause notice to the firm dated July 29, 2021, stating that Paytm Payments Bank had committed an offence under the Payment and Settlement Systems Act, 2007 by submitting false information to RBI confirming completion of the transfer of Bharat Bill Payment Operating Unit business by One97 Communications to PPBL.

The RBI had imposed a penalty of Rs 1 crore on Paytm Payments Bank for the offence.