RBI Bans Paytm Payments Bank Latest Update – The Reserve Bank of India (RBI) took strong action against Paytm which is a famous E-commerce company. Under “Serious supervisory concerns”, RBI directed Paytm Payments Bank to suspend any financial transaction for their new customers. So, now Paytm Payments Bank won’t be able to serve their new clients who will download and install the Paytm app after this RBI’s order. Only when RBI will find everything clean in their next audit to Paytm Payments Bank, will be able to resume the service.
RBI Bans Paytm Payments Bank
In the current audit of RBI to Paytm Payments Bank they found “material supervisory concerns observed in the bank” faults. RBI took this action under Section 35A of the Banking Regulation Act, 1949 which allow RBI to give directions to banks and can take action, “to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company. The Paytm bank has also been directed by RBI to appoint an audit firm as soon as possible to conduct a comprehensive audit of its IT system.
The Paytm Payments Bank
Paytm is an Indian multinational technology company founded by Vijay Shekhar Sharma in December 2010. This Noida-based company works in the digital payment system, e-commerce, and financial services. The company’s revenue till 2021 was 3,187.6 crores INR (US$420 million) and it’s one of the fast-growing brands in the last 5 years. The total worth of this company is 9,150.7 crores INR (US$1.2 billion, 2021). Recently Paytm launched its IPO which is currently trading at Rs. 775.05, a huge dropdown after a launch price of Rs. 2,150.
According to RBI’s press release, this action to ban Paytm Payments Bank was taken due to some severe supervisory issues identified. Before this in December 2020, the Reserve Bank Of India directed HDFC Bank from launching their new digital products, services, and issuing new credit cards. Now another big company Paytm comes under the RBI’s radar.
Is Paytm Payments Bank Going to Be Discontinued Forever?
First of all, we have to understand that Paytm is a Company that has many active services for their customers and Paytm Payments Bank is one of those services. So, RBI didn’t ban the entire Paytm company but only the Paytm Payments Bank service that too for new customers only.
Will it affect your Paytm transactions?
This latest issue on going with Paytm Payments Bank will not affect existing Paytm users. These existing users of Paytm will be able to use the app and do transactions as they were doing earlier. Paytm explained to their users about the scenario through a press release and said, “PPBL’s existing customers can continue to enjoy the benefits of seamless banking and digital payments services without interruption.”