India’s Paytm Payments Bank Barred From Adding New Customers
RBI barred Paytm Payments Bank from accepting new customers, pending a comprehensive audit of its information-technology systems.
(Bloomberg) -- The Reserve Bank of India barred Paytm Payments Bank, founded by One 97 Communications Ltd’s. Vijay Shekhar Sharma, from accepting new customers, pending a comprehensive audit of its information-technology systems.
“This action is based on certain material supervisory concerns observed in the bank,” the central bank, which is also the regulator of the nation’s banking sector, said in a statement on Friday.
The company is taking steps to comply with the RBI’s directive, including the appointment of an external auditor, it said in a statement on Saturday. Existing customers will be unaffected.
Paytm Payments Bank started its operation in November 2017 after getting its license in 2015. Sharma spearheads the bank’s strategy and vision, according to its website, and has played a vital role in the evolution of mobile payments in India.
The Payments Bank processes the transactions for Paytm unlike other payment players who do not have a bank in the group, said Anand Dama, an analyst at Emkay Global Financial Services Ltd. As of now, the RBI has not put any embargo on the processing business of Paytm Bank which is a key revenue driver, he said.
Still, this will be sentimentally negative for Paytm which has seen sharp correction since its initial share sale, Dama said.
One 97 Communications Ltd. raised $2.5 billion in its IPO but a 27% plunge in its Nov. 18 debut made it one of the worst initial showings by a major technology firm since the dot-com bubble era of the late 1990s. The stock is now down nearly 64% from its issue price of 2,150 rupees.
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