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Paytm Payments Bank barred from onboarding clients; RBI directs IT audit

The bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system.

By: ENS Economic Bureau | Mumbai |
Updated: March 12, 2022 9:26:23 am
The interface of payments app Paytm is seen in front of its logo displayed in this illustration picture taken July 7, 2021. (Reuters)

The Reserve Bank of India (RBI) Friday directed Paytm Payments Bank Ltd to stop onboarding new customers with immediate effect and conduct a comprehensive audit of its IT system, citing “material supervisory concerns”.

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Onboarding of new customers by Paytm Payments Bank will be subject to specific permission to be granted by RBI after reviewing report of the IT auditors, the RBI said.

“This action is based on certain material supervisory concerns observed in the bank,” the central bank said.

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“The RBI has, today, in exercise of its powers, inter alia, under Section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank to stop, with immediate effect, onboarding of new customers,” it said. The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system, the RBI said.

“This action is based on certain material supervisory concerns observed in the bank,” the central bank. Paytm Payments Bank got the approval from the RBI in 2017.

For the year-ended March 31,2021, Paytm Payments Bank, which has the largest scale among all payment banks, had recorded net profit of Rs 17.88 crore on sales of Rs 1,987.84 crore, according to Paytm’s IPO prospectus. One97 Communications owns 49 per cent equity interest in Paytm Payments Bank, while the rest 51 per cent is owned by Vijay Shekhar Sharma.

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First published on: 11-03-2022 at 06:10:42 pm

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