Paytm Payments Bank Pulled Up For "Material Supervisory" Concerns, Barred From Enrolling New Custmers
By A Special Correspondent
First publised on 2022-03-12 10:17:34
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The problems of Paytm Payments Bank (PPB) do not seem to end. Five months ago, the bank was fined Rs 1cr by Reserve Bank of India (RBI) for submitting false information regarding the transfer of its Bharat Bill Payments business. Now, in a fresh action, the RBI has barred it from onboarding new customers based on certain "material supervisory" concerns. Although the RBI did not specify the exact concerns for which PPB was being denied from enrolling fresh customers, the buzz in the market is that something was found amiss in the bank's processes for complying with the 'know your customer' (KYC) norms. Paytm was also pulled up by the RBI in June 2018 when the regulator made certain observations regarding its KYC process.
The RBI has directed PPB to appoint an IT audit firm to conduct a comprehensive system audit. The order issued by the apex bank said that "onboarding of new customers by Paytm Payments Bank will be subject to specific permission to be granted by the RBI after reviewing report of the IT audit." This, however, will have no impact on the existing customers of the bank and they can avail of all services of the bank. But trust and brand loyalty are two things that might get eroded as any RBI inquiry is likely to make current and future customers jittery.
The RBI is very strict about banks following the initial and periodic process for KYC in order to prevent the opening or continuation of fraudulent bank accounts. Hence, if it finds any bank not following the process, it takes immediate action. As digital transactions surge in India, the RBI want to build a robust and failsafe system and will brook no laxity. While the IT audit of PPB bank will show where it was lax in following the process, PPB will do well to tighten up its processes and ensure that the KYC norms are fulfilled correctly as per RBI directives.
