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RBI bars Paytm Payments Bank from signing up new customers

Banking regulator seeks system audit of payments bank’s IT system

March 11, 2022 08:03 pm | Updated 08:03 pm IST - Mumbai

FILE PHOTO: The interface of Indian payments app Paytm is seen in front of its logo displayed in this illustration picture taken July 7, 2021. REUTERS/Florence Lo/Illustration//File Photo

FILE PHOTO: The interface of Indian payments app Paytm is seen in front of its logo displayed in this illustration picture taken July 7, 2021. REUTERS/Florence Lo/Illustration//File Photo | Photo Credit: FLORENCE LO

The Reserve Bank of India on Friday ordered Paytm Payments Bank Ltd. to immediately stop onboarding new customers, citing “certain material supervisory concerns observed in the bank”. The RBI said it was exercising its powers under section 35A of the Banking Regulation Act, 1949, to order the action on the payments bank.  “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 statement on its website. 

“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,” the central bank added. The banking unit of digital payments operator Paytm, which is backed by China’s Ant Group and Japan’s SoftBank, provides services to more than 300 million wallets and 60 million accounts, according to information on its website.

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