Paytm Payments Bank barred from onboarding purchasers; RBI directs IT audit

The Reserve Bank of India (RBI) Friday directed Paytm Payments Bank Ltd to cease onboarding new clients with instant impact and conduct a complete audit of its IT system, citing “material supervisory concerns”.

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Onboarding of recent clients by Paytm Payments Bank shall be topic to particular permission to be granted by RBI after reviewing report of the IT auditors, the RBI mentioned.

“This action is based on certain material supervisory concerns observed in the bank,” the central financial institution mentioned.

“The RBI has, today, in exercise of its powers, inter alia, under Section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank to stop, with immediate effect, onboarding of new customers,” it mentioned. The financial institution has additionally been directed to nominate an IT audit agency to conduct a complete System Audit of its IT system, the RBI mentioned.

“This action is based on certain material supervisory concerns observed in the bank,” the central financial institution. Paytm Payments Bank bought the approval from the RBI in 2017.

For the year-ended March 31,2021, Paytm Payments Bank, which has the biggest scale amongst all cost banks, had recorded internet revenue of Rs 17.88 crore on gross sales of Rs 1,987.84 crore, in keeping with Paytm’s IPO prospectus. One97 Communications owns 49 per cent fairness curiosity in Paytm Payments Bank, whereas the remainder 51 per cent is owned by Vijay Shekhar Sharma.