The Reserve Bank of India on Friday barred the Paytm Payments Bank from getting new customers. The decision means the payments bank will not be allowed to open new accounts. The RBI cited “material supervisory concerns” in functioning of Paytm Payments Bank as reason for the decision.
The central bank has also directed Paytm Payments Bank to hire a firm to conduct an audit of its information technology system.
“Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing report of the IT auditors,” it said.
A payments bank can conduct most banking operations but cannot give loans or issue credit cards. It can accept demand deposits of up to Rs 1 lakh, offer remittance services, conduct mobile payments and transfers and perform other banking services such as issuing debit cards, enabling net banking facilities and third party fund transfers.
Paytm Payments Bank began its operations in May 2017 when it opened its first branch in Uttar Pradesh’s Noida city. Online payment services company Paytm’s founder Vijay Shekhar Sharma holds 51% stake in the company, while Chinese e-commerce firm Alibaba-backed One97 Communications holds the rest.