The Reserve Bank of India has blocked the PayTm Payments Bank from bringing new customers on board. Moreover, the Central Bank has also ordered the company to appoint an IT Audit firm to audt its IT Systems, citing concern over certain “material supervisory concerns observed in the bank.”
The press release said, “action against Paytm Payments Bank Ltd under section 35 A of the Banking Regulation Act, 1949. The RBI has today, in 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 bank had been formally incorporated in August 2016 and began its operations in May 2017. This is not the first time that PPB has gotten in trouble. A fine was imposed on the bank over its continuous tech issues. On March 9, it was reported that PayTm would likely approach the Central Bank for the license of a small finance bank.
This ban and the audit is said to be a speed bump in those plans for the company. However, Macquarie issued a report stating that this ban may not have a substantial impact on the listed company’s fintech business. The company’s stock, which had opened at Rs 1950 is not even worth Rs 1000 today. The company fell through the Rs 800 mark the day Russia attacked Ukraine and currently trades around Rs 775.
Highlight by Aman Agarwal.