Paytm on Saturday said that its associate, Paytm Payments Bank Limited (PPBL), was taking immediate steps to comply with RBI directions after the regulator barred the payments bank from onboarding new customers.
PPBL is also taking steps to appoint a “reputed external auditor” to conduct a “comprehensive systems audit” of its IT systems, Paytm said in a filing to the stock exchanges.
Paytm’s statement came in response to RBI’s action against PPBL under Section 35A of the Banking Regulation Act 1949. The RBI has directed PPBL to stop onboarding of new customers with immediate effect. PPBL has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system. RBI also said that its action is based on “certain material supervisory concerns” observed in the bank.
RBI has said that the onboarding of new customers by PPBL will be subject to specific permission to be granted by RBI after reviewing the report of the IT auditors.
Paytm in its stock exchange filing, said that PPBL remains committed to working with the regulator to address their concerns as quickly as possible. It also said that the latest RBI action on PPBL will “not materially impact Paytm’s overall business”. This direction does not impact the services that Paytm provides in partnership with other financial services institutions.
Meanwhile, PPBL said in a blog post that its existing customers can continue to enjoy the benefits of seamless banking and digital payments services without interruption. The savings of existing users in their PPBL account, their fixed deposits with partnered banks and the balance maintained in their Paytm wallet, FASTag or Wallet Card and UPI services are “completely safe and functional”.
“The bank remains fully committed to maintaining high standards of compliance and continues to promote digital banking services for all. Rest assured your accounts are fully functional and you can continue to enjoy our services”, the PPBL blog post said.
Until further notice, New customers, however, will not be able to open current or savings accounts with the lender. They will also not be able to open the Paytm Payments Bank wallet, the lender added.
PPBL is currently 51 per cent owned by Paytm founder Vijay Shekhar Sharma and the rest 49 per cent by Paytm, which was listed in bourses in November last year through a mega ₹ 18,300 crore initial public offering. PPBL is widely expected to approach RBI this year for a Small Finance Bank. Given the latest directions from the central bank, this licence may not be readily coming PPBL’s way this year, say banking industry experts.