Paytm Payments Bank: It’s about a firm, nothing to worry about the system, says RBI Governor

Paytm Payments Bank

The Reserve Bank of India (RBI) Governor Shaktikanta Das on February 8 said that business restrictions imposed on Paytm Payments Bank were a specific issue and there was nothing to worry about the entire system.

“Let me put the record straight on the Paytm issue. There is no worry about the entire system. It is an issue with a specific institution,” Das said in the customary interaction with media after announcing the policy decision.

On January 31, the RBI imposed major business restrictions on Paytm Payments Bank, including a bar on accepting fresh deposits and doing credit transactions after February 29.

The regulator found major irregularities in KYC, which exposed the customers, depositors and wallet holders to serious risks.

Moneycontrol on February 6 reported that Paytm Payments Bank mess is likely to make existing payments banks exercise caution in their operations although a similar case occurring is unlikely.

Most players are seen sticking to guidelines stipulated by the RBI, industry experts said. Moreover, they will now remain cautious to ensure they are fully compliant and their operations do not cause any regulatory breach, they said.

The RBI on January 31 said it had imposed business restrictions on Paytm Payments Bank. The central bank said a comprehensive system audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action.

On March 11, 2022, the RBI had for the second time barred Paytm Payments Bank from taking on new customers, saying that it had violated know your customer or KYC norms.

No further deposits or credit transactions or top-ups are allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, other than any interest, cashbacks or refunds that may be credited anytime, the RBI said.

At 12.37 pm, Paytm was trading at Rs 457.15 on the National Stock Exchange, down 7.88 percent down from the previous close.