The RBI has directed the Paytm Payments bank from taking on new customers with immediate effect. The reason for the abrupt stoppage taking on new clientele is the material supervisory concerns observed within the Bank.
Paytm Payments Bank has been directed to hire an audit firm for a comprehensive audit. This enables the assessment of the entire IT system that they hold, which the RBI needs a report of to take further action.
Why such action is taken
The move from RBI has been because of the one27 communications, which happens to be the parent company of Paytm. The company has seen an underwhelming response to its listings over several months. This has been the cause of concern and is believed to be stemming from the company’s valuation.
Paytm can continue taking new customers after receiving permission from RBI. This specific permission will happen only after reviewing the IT auditor’s report. The RBI provided the approval to function as a scheduled payments bank last December, enabling the Paytm Payments Bank financial services operations to expand their outreach.
The founder of Paytm, Vijay Shekar Sharma, a billionaire, owns 51% of the Paytm Payments Bank. Paytm happens to be a leading financial services company in the country which offers full-stack payments and financial solutions to its customers on online platforms.