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Supervisory action against Paytm Payments Bank ‘not yet complete’: RBI

The banking sector regulator, in an order dated March 11, had directed the Vijay Shekhar Sharma-led payments bank to stop adding new customers with immediate effect while also asking it to appoint an IT audit firm to conduct a comprehensive audit of the IT system of the payments bank.

On April 4, the Finance Ministry told the Parliament that it was informed by the RBI that Paytm Payments Bank had not appointed an audit firm for the audit of its IT systems. (File)

The supervisory action by the Reserve Bank of India (RBI) against Paytm Payments Bank, which led to the banking regulator suspending the payments bank from onboarding any new customers, is “not yet complete”, the RBI said in response to a Right to Information (RTI) application filed by The Indian Express.

The banking sector regulator, in an order dated March 11, had directed the Vijay Shekhar Sharma-led payments bank to stop adding new customers with immediate effect while also asking it to appoint an IT audit firm to conduct a comprehensive audit of the IT system of the payments bank.

At the time, the central bank had said that onboarding of new customers by Paytm Payments Bank will be subject to “specific permission to be granted by RBI after reviewing a report of the IT auditors”. On April 4, the Finance Ministry told the Parliament that it was informed by the RBI that Paytm Payments Bank had not appointed an audit firm for the audit of its IT systems.

“It is informed that the supervisory process/action in the (Paytm Payments Bank) matter is not yet complete,” the central bank said in the RTI response to a question on the reasons behind RBI’s order. Following the RBI’s order on March 11, news reports claimed that the suspension was on account of Paytm Payments Bank sharing information with Chinese entities that indirectly own a stake in the payments bank. The payments bank is a joint-venture between Paytm and its founder Vijay Shekhar Sharma. Paytm, parent company of which One 97 Communications Ltd is a listed entity, has shareholding by China’s Alibaba Group and its affiliates.

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Paytm Payments Bank had denied these reports and said that it was “fully compliant with RBI’s directions on data localisation”. “All of the Bank’s data resides within India,” it added.

Separately, on RBI suspending onboarding of new users on the payments bank, it had said that it was “taking immediate steps to comply with RBI directions, including appointment of a reputed external auditor to conduct a comprehensive system audit of IT systems”. “Any new users coming to the Paytm app can create Paytm UPI handles, and link them to their existing PPBL account or to other bank accounts. However, new users cannot, until further notice, sign up for new PPBL wallets or PPBL savings or current account,” it had said.

First published on: 12-04-2022 at 03:10:13 am
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