RBI compels Paytm Payments Bank to halt operations; customers affected by suspension of mobile wallet services
Paytm Payments Bank Ltd., a subsidiary of One 97 Communications Ltd., has been instructed by the Reserve Bank of India to cease its mobile wallet business and other operations due to ongoing non-compliance and supervisory concerns. The regulatory body has mandated that the company, responsible for handling transactions for India’s leading digital payments platform Paytm, must halt its banking activities by the end of February.
How are customers affected?
However, existing customers can withdraw their funds and use prepaid cards or wallet balance without any restrictions, RBI said.
Flashback after flashback
The latest decision comes nearly two years after a regulator barred the bank from taking on new customers because it violated certain rules, Bloomberg News reported. Founder Vijay Shekhar Sharma had then said that the bank is fully compliant with Indian regulations.
The RBI had asked the bank, which operates under a restricted license that does not allow it to lend but accepts deposits of up to 200,000 rupees ($2,408.4) per account, to stop accepting customers until its IT system is audited.
On Wednesday, the bank’s troubles appeared to worsen after the regulator made some nasty findings about its business operations.
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“A comprehensive system audit report and subsequent compliance validation report by external auditors revealed persistent non-compliance and persistent material control issues at the bank, warranting further action,” the RBI said on its website.
RBI said the bank shall not take any other deposits or conduct credit transactions or make additions to any customer account, prepaid instruments, wallets, cards for payment of tolls after February 29. Interest, cash back or refunds can be paid and credited at any time.
Special accounts used for making payments of parent company One97 Communications Ltd and Paytm Payments Services Ltd must also be closed by February 29 at the earliest and latest, RBI said. All pending reports must be completed by March 15, the central bank added.
