On Friday, March 11, the Reserve Bank of India has ordered Paytm Payments Bank to stop the onboarding of new customers. The order comes under section 35A of the Banking Regulation Act, 1949.
RBI has further directed Paytm to conduct a comprehensive system audit of its IT system. The onboarding of new customers will resume once the RBI clears the review of the audit report. “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. This action is based on certain material supervisory concerns observed in the bank,” RBI said in a statement.
Paytm Payments Bank started its operations in 2017. According to a report by Moneycontrol, Paytm was likely to apply for a small finance bank license by June of this year. Further updates by RBI are to be awaited as to why this order was imposed on the Paytm Payments Bank.
