RBI directs Paytm Payments Bank to stop onboarding new customers, orders IT audit

Paytm Payments Bank Chairman Vijay Shekhar Sharma held a 51 percent stake in the company.

It is not immediately clear what are the exact reasons that invited the RBI action. The RBI said the action was based on certain material supervisory concerns observed in the bank.

According to Paytm Payments Bank website, the company  has 100 million KYC customers and it is adding 0.4 million users every passing month. "We are also the largest issuer of FASTag with over 8 Million FASTag units issued," the website says.

On December 9, Paytm Payments Bank said it had been included in the Second Schedule to the Reserve Bank of India Act, 1934. This enabled it to explore new business opportunities, the company said in a press release.

These include government and other large corporations issued Request for Proposals (RFP), primary auctions, fixed-rate and variable rate repos, and reverse repos, along with participation in Marginal Standing Facility, the company said.

In October, 2021, the RBI had imposed a monetary penalty on Paytm Payments Bank for violation of certain rules. This was after an RBI examination of PPBL’s application for issue of final Certificate of Authorisation (CoA).

The RBI observed that PPBL had submitted information which did not reflect the factual position.  Subsequently, the RBI issued a notice to PPBL and a penalty was imposed.