RBI takes action against PayTM Payments Bank

The RBI exercised its powers under section 35A of the Banking Regulation Act, 1949 and directed the bank to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system.

Mumbai:The Reserve Bank of India (RBI) directed Paytm Payments Bank Ltd to stop, with immediate effect, the onboarding of new customers on Friday. The RBI exercised its powers under section 35A of the Banking Regulation Act, 1949 and directed the bank to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system. It has further stated that the onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission granted by the RBI after reviewing the report of the IT auditors.

This clampdown on PayTM was taken based on certain material supervisory concerns observed in the bank. Recently, the RBI accorded Paytm Payments Bank scheduled bank status. During the October-December quarter, PayTM saw its revenues jump by 89 percent y-o-y to Rs 1,456 crore, EBITDA losses (before ESOP expense) came down to Rs 393 crore from Rs 488 crore during the same quarter in the previous year. This revenue increase was led by high monetization and growth in merchant payments through MDR-bearing instruments, new device subscriptions, and loan disbursements.