Informist, Friday, Mar 11, 2022
By T. Bijoy Idicheriah
MUMBAI - Paytm Payments Bank faced tight curbs on operations today after the Reserve Bank of India found continued lapses in adherence to know-your-customer norms while opening accounts, as well as lapses in customer protection, and continued inter-linkages with parent One97 Communications' arm Paytm despite the central bank's warnings, a senior industry source said.
The RBI today barred Paytm Payments Bank from on-boarding new customers with immediate effect. The action is based on certain "material supervisory concerns" observed in the bank, the central bank said. It directed the bank to appoint an information technology audit firm to conduct a comprehensive audit of its systems.
"The latest RBI audit had red flagged these issues that have persisted at the bank since inception, with only marginal improvement. The last straw was detection of a bunch of accounts that were active with lax KYC and another set of dormant accounts that had inadequate KYC," the source said.
In multiple audits in the past, RBI had stressed the need to separate the information technology systems and staff between Paytm Payments Bank and Paytm, which is a separate entity.
However, the issues were not satisfactorily addressed, with many Paytm officials continuing to be intricately involved in activities of the payments bank, including in decision-making, despite claims by the bank that there was a Chinese wall between them.
The use of the Paytm brand beyond financial services remains a contentious issue for the central bank, though it wasn't immediately responsible for the latest restrictions imposed by RBI.
Paytm Payments Bank, which started operations in 2017, is a subsidiary of One97 Communications. Today, shares of One97 Communications closed flat at 775.05 rupees on the National Stock Exchange.
In December 2021, RBI had accorded the status of a 'scheduled bank' to the payments bank.
In June 2018, the central bank had barred the bank from adding new customers after a regulatory audit showed lapses in terms of adherence to RBI's know your customer norms. However, these restrictions were lifted in January 2019.
Then, in October, the bank was fined 10 mln rupees as the RBI detected gaps in compliance with regulatory norms. End
With inputs from Alekh Archana
Edited by Avishek Dutta
Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
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Informist, Friday, Mar 11, 2022
By T. Bijoy Idicheriah
MUMBAI - Paytm Payments Bank faced tight curbs on operations today after the Reserve Bank of India found continued lapses in adherence to know-your-customer norms while opening accounts, as well as lapses in customer protection, and continued inter-linkages with parent One97 Communications' arm Paytm despite the central bank's warnings, a senior industry source said.
The RBI today barred Paytm Payments Bank from on-boarding new customers with immediate effect. The action is based on certain "material supervisory concerns" observed in the bank, the central bank said. It directed the bank to appoint an information technology audit firm to conduct a comprehensive audit of its systems.
"The latest RBI audit had red flagged these issues that have persisted at the bank since inception, with only marginal improvement. The last straw was detection of a bunch of accounts that were active with lax KYC and another set of dormant accounts that had inadequate KYC," the source said.
In multiple audits in the past, RBI had stressed the need to separate the information technology systems and staff between Paytm Payments Bank and Paytm, which is a separate entity.
However, the issues were not satisfactorily addressed, with many Paytm officials continuing to be intricately involved in activities of the payments bank, including in decision-making, despite claims by the bank that there was a Chinese wall between them.
The use of the Paytm brand beyond financial services remains a contentious issue for the central bank, though it wasn't immediately responsible for the latest restrictions imposed by RBI.
Paytm Payments Bank, which started operations in 2017, is a subsidiary of One97 Communications. Today, shares of One97 Communications closed flat at 775.05 rupees on the National Stock Exchange.
In December 2021, RBI had accorded the status of a 'scheduled bank' to the payments bank.
In June 2018, the central bank had barred the bank from adding new customers after a regulatory audit showed lapses in terms of adherence to RBI's know your customer norms. However, these restrictions were lifted in January 2019.
Then, in October, the bank was fined 10 mln rupees as the RBI detected gaps in compliance with regulatory norms. End
With inputs from Alekh Archana
Edited by Avishek Dutta
Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2022. All rights reserved.
