The bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit. “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 auditors,” the central bank said.
Although the RBI did not divulge the exact discrepancy for which PPB is facing action, market sources attributed it to issues relating to ‘know your customer’ (KYC) norms.
A Paytm Payments Bank spokesperson said, “We are working with the regulator and addressing the concerns. This will not impact our existing customers in any way and they can continue to use our services.”
The RBI’s action to bar Paytm from taking on new customers comes five months after the central bank penalised PPB Rs 1 crore for submitting false information regarding the transfer of its Bharat Bill Payment Business, which was an offence under the Payment & Settlement Systems Act.
“The impact on business for Paytm from this ban is not expected to be substantial immediately since Paytm has already onboarded a very large customer base onto the payments bank,” said Suresh Ganapathy, research analyst with Macquarie Capital. “However, we would expect a significant impact on brand & customer loyalty,” he added.