New Delhi: The Reserve Bank of India (RBI) has barred Paytm Payments Bank from onboarding new customers with immediate effect due to certain material supervisory concerns observed in the bank. The banking regulator said the bank has been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system.
“The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system. Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing the report of the IT auditors,” RBI said adding that the action is based on certain material supervisory concerns observed in the bank.
The action by RBI has been taken under section 35A of the Banking regulations Act, 1949. The RBI has today, in the exercise of its powers, inter alia, under section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank Ltd to stop, with immediate effect, onboarding of new customers, the press notice said. Restriction under the act also applies if the RBI wants to ensure better government and control within the banking company.
Vijay Shekhar Sharma, Founder & CEO of Paytm and One97 Communications Limited together own Paytm Payments Bank, which has over 58 million account holders. Sharma is the Chairman of Paytm Payments Bank.