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After a long wait of six months, the Reserve Bank of India (RBI) allowed the Paytm Payments Bank (PPB) to restart opening accounts for customers. The company will reportedly start the Know Your Customer (KYC) facilities for bank accounts and wallets soon.
Why did RBI restrict the Paytm Payments Bank from some functions? The central bank had found slip-ups on Paytm's part regarding statutory norms when it ran a regulatory audit six months ago. The regulator was also miffed by the close relations between Paytm's parent company One97 Communications and the entity that runs PPB.
The payments bank violated the Rs 1-lakh limit per account. The RBI also said it did not maintain its prescribed net worth limit of Rs 100 crore.
After the audit, Paytm replaced Renu Satti with veteran banker Satish Gupta to head the payments bank, who promised to turn the company's operations around.
The RBI did not impose any fine on the company, a company spokesperson confirmed to The Economic Times. The person added that the bank has 42 million accounts currently, which it hopes to increase to 100 million before the end of 2019.
Payments banks are yet to have a big impact on India's financial industry and Paytm is heading that mission, according to a member of the industry. "Paytm has a large chunk of its customers using the bank account and the wallet interchangeably, and has played a crucial role in driving financial inclusion. Under the new leadership, they will try to expand their reach and get more customers," the person added.
Another payments bank the RBI had stopped from opening new accounts was Fino, as it was unable to impose a deposit limit of Rs 1 lakh on its account holders. Fino received the green light in October but had to pay a fine of Rs 1 crore to the regulator.
In FY18, PPB had reported a loss of Rs 20 crore against a revenue of Rs 720 crore.
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