Paytm Payments Bank’s Growth Was Banned By RBI? Shocking RTI Reply Which Tells Why!
Paytm founder Vijay S. Sharma's proximity to their Payments Bank was a big issue for RBI, it seems.
In the month of August, RBI had banned Paytm’s Payments Bank from adding new customers. We had speculated some reasons, which were unconfirmed at that time.
But now, shocking RTI revelations have come out, which tells us the exact reason why Paytm Payments Bank’s growth was blocked by RBI.
Keep reading to find out more.
KYC Issues Means Trouble For Paytm Payments Bank Business
Times of India had filed a RTI or Right to Information petition to find out why Reserve Bank of India had banned and blocked Paytm from adding new customers to their recently opened Payments Bank.
The shocking RTI reply tells us 4 major reasons.
The most prominent among them is KYC or Know Your Customer mechanism followed by Paytm.
RBI has refused to share the exact violations which led to Paytm’s Payments Bank ban, but we speculate it can be related with Aadhaar.
Most probably, Paytm was using Aadhaar for verifying new customers, for that, they had to access UIDAI’s database, which has now become a criminal offense for private companies.
But in August, every other company was doing that.
There is certainly more to it, but we are not exactly aware of what are they.
Paytm Founder’s Proximity To The Bank
The dynamics of ownership also worried RBI, and they blocked Paytm Payments Bank from adding new customers.
Paytm founder Vijay Shankar Sharma owns 51% stake in the new Payments Bank, and rest in owned by One97 Communications and its subsidiaries. This close proximity of the founder with a bank was a big issue it seems.
TOI says, “Payments banks are expected to maintain an arm’s length relationship with promoter group entities.”
Violation Of Payments Bank Rules and Regulations
Besides KYC issue, and founder’s proximity to the bank, RBI observed that Paytm’s Payments Bank violated two major rules of the bank:
- The parent company failed to maintain Rs 100 crore minimum capital, which is required for such payments bank.
- The 1 lakh is the maximum amount which any account holder can keep in their respective accounts. It seems that this rule was also broken.
As per TOI, RBI was reluctant to share these reasons via RTI, as they mentioned some clauses which prevented them. But RTIWala and TOI again filed their RTI petition, and this time, RBI gave in.
Aftershocks Of This Ban
This ban on Paytm’s Payments Bank to add new customers was not an ordinary development – It questioned their operational capabilities, and there were some after-shocks as well.
Then CEO Renu Satti had resigned after this incident, and the post was vacant. S K Gupta, a former NPCI and SBI executive, was appointed as their CEO in the month of October.
There has been no reaction from Paytm on this shocking RTI replies yet.
We will keep you updated, as more details come in.