Paytm shares in news as RBI fines Paytm Payment Bank for compliance lapses

Shares of One 97 Communications Ltd (Paytm) will be in focus on Friday morning after the company said the Reserve Bank of India has (RBI) imposed a monetary penalty of Rs 5.39 crore on its associate company Paytm Payments Bank for non-compliance with certain provisions of the RBI's Know Your Customer (KYC)) directions, guidelines for licensing of payments banks, cyber security framework in banks, and securing of mobile banking applications including UPI ecosystem.

The central bank said its action was based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. A notice was earlier issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions.

The RBI said Paytm Payments Bank failed to identify beneficial owner in respect of entities onboarded by it for providing payout services. Also, the apex bank suggested that  Paytm Payments Bank did not monitor payout transactions and carry out risk profiling of entities availing payout services.

The central bank  Paytm Payments Bank breached the regulatory ceiling of end of the day balance in certain customer advance accounts availing payout services; it reported a cyber security incident with delay and it also failed to implement device binding control measure related to ‘SMS delivery receipt check’.

Besides, the RBI suggested that Paytm Payments Bank's V-CIP infrastructure failed to prevent connections from IP addresses outside India.

"Our associate PPBL has the highest regards for the extant RBI regulatory framework and is taking steps to ensure complete adherence to the supervisory instructions issued in this regard. PPBL is also currently in the process of adhering to other instructions of RBI," Paytm informed stock exchanges overnight.

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