Weeks after RBI told Paytm Payments Bank to stop adding new customers with immediate effect, the uncertainty over lifting of restriction is still maintained.
Paytm founder and CEO, Vijay Shekhar Sharma on Thursday also had a meeting with Reserve Bank of India (RBI) officials on the issue. However, the discussion in the meeting is still not out in media.
RBI had earlier directed the payments bank to stop adding new customers in July end.
After that, CEO of Paytm Payments Bank, Renu Satti resigned from the post to lead a new role as the chief operating officer of an upcoming retail arm of one97 communications. Satti served about 14 months as a CEO of the bank.
In the past months, the RBI has become very strict against payments banks. It wants payments banks to follow the Know Your Customer (KYC) process for customers. Besides, it wants them to meet the same standards of data privacy and security as followed by other banks.
Recently, it also asked Fino Payments Bank to stop enrolling new customers.
Importantly, the lackadaisical attitude of payments banks and how they are exploiting the ecosystem were exposed when Airtel Payments Bank was accused for surreptitiously adding customers during the Aadhaar verification of their mobile numbers.
The addition of over 30 lakh customers to Airtel’s Payments had been a major embarrassment for the telecom company after UIDAI issued a show-cause notice to the company and later suspended the online Aadhaar verification process for Airtel and its payments bank. However, it received approval to open new accounts in July.
Despite all the freebies offered by payments banks in the form of cashbacks— which the RBI has strongly objected, they have failed to pull customers.
Experts reason that payments banks can’t lend in any form like the other banking bodies do and make revenue out of lending and credit card business. Moreover, payments banks are allowed to accept only savings and current deposits of up to Rs 1 lakh per customer.
The cap on deposit with the current account at one time also makes it irrelevant for SMEs.
Currently there are four payment banks operating in the country – Paytm, Airtel, Fino and Aditya Birla-Idea Payments Bank. India Post Payments Bank will start its operations on September 1.
The development was first reported by Business Standard.