Paytm Payments Bank is reportedly not enrolling new customers due to an RBI order.
The Reserve Bank of India (RBI) has reportedly ordered Paytm Payments Bank to suspend the enrolment of new customers. The central bank is said to have found discrepancies in the adherence of know-your-customer (KYC) norms by the Noida-based company. Following a formal audit by RBI, Paytm stopped enrolling new customers on June 20, a report said. The latest development comes amidst the expansion of the company that is popular for its mobile wallet service. Last month, SoftBank announced the integration of Paytm's technology to launch a new mobile payments service in Japan. Paytm also recently launched its forex services in 20 international currencies to reach more users from India.
RBI has directed Paytm Payments Bank to stop adding new customers with immediate effect, Mint reports, citing people familiar with the development. It is also said that RBI had questioned the ability of Renu Satti to lead a banking services firm; the central bank requires chief executives of payments banks to have a background in banking. Consequently, the executive stepped down from her position last month and took the role of Chief Operating Officer for Paytm's New Retail unit. Satti had joined Paytm Payments Bank as Managing Director and Chief Executive Officer in May last year.
Refuting the authoritative pressure on the departure of Satti, a Paytm spokesperson told Mint that she was appointed on 19th May 2017 vide an official approval from RBI. Paytm is notably yet to fill the position of CEO for its Payments Bank operations.
Alongside questioning the ability of Satti, RBI scrutinised the operations of Paytm Payments Bank that was launched in November last year after receiving an 'in-principle' approval from RBI in August 2015. It is said that the apex bank observed that Paytm should have better security management in storing customer data and have a separate office from that of One97 Communications, the parent company of Paytm. Notably, the company off late shifted its Paytm Payments team to a new facility in Noida.
It is claimed that Paytm Payments Bank is currently modifying the account opening process to add 'current accounts' due to which new account creation has been paused. We were able to verify the suspension of new enrolments.
We've reached out to Paytm for clarity on the suspension and will update this space accordingly.
This isn't the first time when RBI has questioned the operations of a digital payments bank. In March, the central bank slapped a penalty of Rs. 5 crores on Airtel Payments Bank for violating KYC checks. It had also temporarily suspended the eKYC process of the payments bank on account of opening accounts of its subscribers without taking their explicit consent.
Earlier this year, Paytm started allotting physical debit cards to customers having a payments bank account. It also partnered with IndusInd Bank in January to start offering fixed deposit facility.
Disclosure: Paytm's parent company One 97 is an investor in Gadgets 360.
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