Reserve Bank of India (RBI), in one of rare instances, has disclosed the reason for blocking Paytm’s payments banking business. The RBI, in August this year, barred Paytm Payments Bank to open new customer accounts and e-wallets.
The Noida-headquartered firm has violated know-your-customer (KYC) rules while on-boarding users, TOI reported citing RBI’s response to an RTI filed by the newspaper.
The Noida-headquartered firm has violated know-your-customer (KYC) rules while on-boarding users, TOI reported citing RBI’s response to an RTI filed by the newspaper.
According to the TOI report, the RBI was not happy with the close relations of One97 Communications founder Vijay Shekhar Sharma with the parent company of Paytm Payments Bank. Among the other conflicting issues which RBI mentioned include, the violation of Rs 1 lakh limit per account at the end of day and Paytm Payments Bank incapability to sustain the authorised net worth limit of Rs 100 crore, as per the TOI report, however the precise violations are not clear as of now.
Payments banks are not allowed to hold over Rs 1 lakh per account at the end of day and are expected to keep a prescribed distance from the promoter and promoter group entities. Vijay Shkhar Sharma owns about 51 per cent stake in Paytm Payments Bank and the rest is held by One97 Communications and its subsidiaries, TOI report said.
Renu satti, Former CEO of Paytm Payments Bank, had stepped down from the position after the Reserve Bank of India barred the payments bank to open new accounts and e-wallets. Following the resignation of Renu Satti, Paytm Payments Bank named former SBI executive SK Gupta as the new CEO of the payments bank.
Payments banks, since their respective inception in India, have been mostly unsuccessful as the collective deposits of all payments banks stood at Rs 540 crore as of May 2018, TOI report said further citing RBI’s reply to the RTI.
