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RBI directs Paytm Payments Bank to immediately stop onboarding new customers

RBI directs Paytm Payments Bank to immediately stop onboarding new customers

This action is based on certain material supervisory concerns observed in the bank, RBI noted.

Paytm Payments Bank app Paytm Payments Bank app

In an official order released on Friday, the Reserve Bank of India (RBI) has directed Paytm Payment's Bank to stop onboarding new customers on its platform with immediate effect. The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system.

This action is based on certain material supervisory concerns observed in the bank, the statement said.

"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," the central bank said in a statement.

Paytm Payments Bank was incorporated in August 2016 and formally began its operations in May 2017 from a branch in Noida.

Paytm Payments Bank had 64 million savings accounts as of March 31, 2021 and over Rs 5,200 crore in deposits. It was also the largest Unified Payments Interface beneficiary bank, with the lowest technical decline rate among beneficiary and remitter banks.

Further, in December, Paytm Payments Bank emerged as the biggest receiver of UPI amount with 926.17 million transactions while public sector bank SBI topped the chart of being the biggest remitter in December, according to data released by the National Payments Corporation of India (NPCI).

In December 2020, the RBI had barred HDFC Bank from launching any new digital products or services and issuing new credit cards till the lender resolved recurring tech issues.