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The Reserve Bank of India (RBI) has taken a stringent measure against Paytm Payments Bank, directing it to halt accepting new deposits and top-ups across customer accounts, wallets, FASTags, and other instruments after February 29.
The move comes in the wake of "persistent non-compliance and supervisory concerns" related to violations, including the misuse of customer documentation rules and non-disclosure of material transactions.
The aftermath saw Paytm's shares plummet, erasing $2 billion of its market value as the stocks hit the lower circuit for two consecutive days.
RBI considering canceling PPBL's operating license
Now, a new report from Bloomberg said the RBI is considering cancelling the operating license of Paytm Payments Bank.
The report decision is under consideration due to the bank's failure to adhere to regulatory standards, particularly in managing customer documentation and conducting transactions well beyond the regulatory limits in minimum-KYC accounts, which has raised concerns over potential money laundering.
However, RBI's consideration may change based on Paytm's representation, the report said.
Compliance and regulatory scrutiny
Paytm Payments Bank, with a 49% stake owned by Paytm's parent company, has been under the RBI's radar for some time, facing multiple warnings over questionable dealings and inadequate customer verification processes.
Despite these challenges, a Paytm Bank representative stated that the bank has complied with the regulator’s instructions, viewing the directive as part of an ongoing supervisory engagement and compliance process.
What does Paytm CEO Vijay Shekhar Sharma say?
In response to the turmoil, Paytm Founder Vijay Shekhar Sharma reassured shareholders and customers, stating, "Your favourite app is working, will keep working beyond 29 February as usual."
To every Paytmer,
— Vijay Shekhar Sharma (@vijayshekhar) February 2, 2024
Your favourite app is working, will keep working beyond 29 February as usual.
I with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full…
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