Paytm Payments Bank has been barred from opening new accounts for customers, the Reserve Bank of India announced Friday evening.
“The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system. Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing [the] report of the IT auditors,” the central bank said in a brief statement, adding that it took the action after “certain material supervisory concerns” came up.
Entrackr has reached out to Paytm for a statement on this development; a spokesperson was not available for immediate comment. It is unclear what the specific reason for RBI’s action has been; we’ve also reached out to the central bank for more details.
Incidentally, the bank scheduled maintenance early Friday morning for its systems, according to a message on its website, though it’s unclear if this was related to the issues observed by the RBI. “Our Banking systems are undergoing scheduled maintenance. Services will be unavailable on 11th March 2022 from 01:15 AM to 02:00 AM and 03.45 AM to 04:45 AM,” the bank told customers.
The RBI has of late been more forthcoming when taking supervisory action against banking and payments players. For instance, it made clear that banks were being barred from issuing new Mastercard cards because of the firm not storing payments data in India. In 2020, when it placed YES Bank under a moratorium, it issued a statement plainly stating that the bank’s financial position meant that it had to step in to protect depositors’ interests.
As of February last year, Paytm Payments Bank had over Rs 1,000 crore in savings deposits and had facilitated Rs 600 crore in fixed deposits for its customers in IndusInd Bank accounts. It offers a limited range of banking services.
One 97 Communications Ltd, Paytm’s parent company, has seen its share price decline to half of its value since the company’s Initial Public Offering in November 2021. The impact of the RBI’s move — announced after close of trading on Friday — may not be apparent until Monday morning, when the markets reopen.