RBI bars Paytm Payments Bank from adding new users:
What is the news :
- The Reserve Bank of India (RBI) has directed Paytm Payments Bank Ltd to stop onboarding new customers with immediate effect .
- The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system.
- Onboarding of new customers by Paytm Payments Bank will be subject to specific permission to be granted by RBI after reviewing report of the IT auditors.
Reason behind the action :
- This action is based on certain material supervisory concerns observed in the bank.
Under which act :
- The RBI has in exercise of its powers, inter alia, under Section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank to stop, with immediate effect, onboarding of new customers.
About Paytm payment bank :Â
- CEO – Vijay Shekhar Sharma.
- Headquarters – Noida, UP
- Paytm Payments Bank got the approval from the RBI in 2017.
- For the year-ended March 31,2021, Paytm Payments Bank, which has the largest scale among all payment banks, had recorded net profit of Rs 17.88 crore on sales of Rs 1,987.84 crore, according to Paytm’s IPO prospectus.
- One97 Communications owns 49 per cent equity interest in Paytm Payments Bank, while the rest 51 per cent is owned by Vijay Shekhar Sharma.
What is payment bank :
- Payments banksis an Indian new model of banks conceptualised by the Reserve Bank of India (RBI) without issuing credit.
- These banks can accept a restricted deposit, which is currently limited to ₹200,000 per customer and may be increased further.
- These banks cannot issue loans and credit cards.
- Both current account and savings accounts can be operated by such banks.
- Payments banks can issue ATM cards or debit cards and provide online or mobile banking.Â
- Bharti Airtel set up India’s first payments bank, Airtel Payments Bank.
About RBI:
- The Reserve Bank of India(RBI) is India’s central bank and regulatory body and is responsible for the issue and supply of the Indian rupee and the regulation of the Indian banking system.
- It also manages the country’s main payment systems and works to promote its economic development.
- Established : 1 April 1935
- Governor: Shaktikanta Das
- Deputy governors (4): Rabi Sankar, M. Rajeshwar Rao, Dr. M. D. Patra, M. K. Jain
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