RBI directs Paytm Payments Bank to stop onboarding new customers, orders IT audit

The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system, the RBI said in a release.

The Reserve Bank of India (RBI) on March 11 directed Paytm Payments Bank to stop onboarding of new customers.

The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system, the RBI said in a release.

RBI | Representative Image.

“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,” the RBI said.

Paytm Payments Bank commenced its operations on May 23, 2017. On March 9, Moneycontrol reported that Vijay Shekhar Sharma-promoted Paytm Payments Bank is likely to apply to the RBI for a small finance bank (SFB) licence by June.

Paytm Payments Bank Chairman Vijay Shekhar Sharma held a 51 percent stake in the company.

It is not immediately clear what are the exact reasons that invited the RBI action. The RBI said the action was based on certain material supervisory concerns observed in the bank.

According to Paytm Payments Bank website, the company  has 100 million KYC customers and it is adding 0.4 million users every passing month. “We are also the largest issuer of FASTag with over 8 Million FASTag units issued,” the website says.

On December 9, Paytm Payments Bank said it had been included in the Second Schedule to the Reserve Bank of India Act, 1934. This enabled it to explore new business opportunities, the company said in a press release.

Source: https://www.moneycontrol.com/news/business/rbi-directs-paytm-payments-bank-to-stop-onboarding-new-customers-orders-it-audit-8222121.html

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