RBI Stops Paytm Payments Bank From Adding New Customers – Find Out Why?
The order from RBI came in on June 20th, after a security and operational audit.
Paytm Payments Bank incredible growth and expansion has come to a screeching halt.
Reserve Bank of India has ordered Paytm Payments Bank to immediately stop adding new customers.
What is the exact reason?
RBI Concerned About Paytm Payments Bank’s Approach?
As per LiveMint, 4 people close to the developments have informed them that RBI is concerned about the approach of Paytm towards its Payments Bank, and unless that is rectified, the ban on adding new customers will persist.
The order to stop adding new customers was made on June 20th, after an audit by RBI concerning the way new customers are added, Paytm’s adherence to KYC norms.
As per reports, Paytm has already stopped enrolling new customers.
3 Major Issues For Paytm Payments Bank
As we dig deeper, we will find that there has been issues related with security, management, data storage among others.
Paytm had appointed Renu Satti as the head of their Paytm Payments Bank, which was strongly objected by RBI.
As per the license terms, the chief of any payments bank will have to be a banker. After this objection, Paytm removed Renu Satti as the chief executive of Payments Bank, and appointed her as the head of ‘New Retail’, which is an upcoming ecommerce venture of Paytm.
At the time of her removal, we were not sure about the main reason, because Renu had played an important part in building Paytm’s movie ticketing vertical, then marketplace and more businesses.
However, here is the official statement from Paytm on this issue: “This is incorrect… Renu Satti’s appointment was made on 19th May 2017 vide an official approval from RBI.”
RBI is concerned about the data safety and security of Paym Payments Bank customers. As of now, the data pertaining to Payym Payments Bank is stored at the One97 Communications Ltd office in Noida Sector 1, which was Paytm’s first office.
After RBI’s objection, Paytm has bought a 10 acre plot for Rs 100-130 crore. This can be used to build their new office which will host only Payments Bank employees and user-data. This, however, hasn’t been confirmed yet
KYC process used by Paytm is also under scrutiny, and the decision RBI’s order to stop adding new customers has something to do with it. We haven’t got precise information as to what is the problem here, but in the past, UIDAI had stopped Airtel Payments Bank from using their database for performing Aadhaar-based KYC.
We are awaiting Paytm’s response on this issue. We will keep you updated, as more information comes in.