E-wallet and e-commerce giant Paytm has stopped adding new customers to its virtual banking service, Paytm Payments Bank after an order by the Reserve Bank of India (RBI). The order was issued on June 20 after an audit found several issues with the process Paytm follows.
First reported by The Mint, the RBI has reportedly found some issues with the way Paytm acquires new customers and adherence to the know-your-customer (KYC) norms. Following the audit, the RBI directed Paytm to stop onboarding new customers with immediate effect.
In order to comply with the RBI's norms, the company is said to be modifying its account opening process so that users now have a current account option.
Furthermore, the company has been asked to remove Renu Satti as the chief executive of the Payments Bank, as the RBI objected that only a banker can become the chief executive. Satti has a background in HR, and this made her ineligible for the role. She took over in May 2017 but has now been shifted to 'new initiatives' at Paytm, where she will work on getting more local services on the platform.
Despite arguing that her appointment was made with RBI's approval, Paytm has decided to comply and is now on the lookout for a new Payments Bank CEO. The company declined to comment on whether it stopped signing up new customers.
The RBI also asked Paytm to upgrade its security mechanisms to store customer data, and wants the Payments Bank to have a separate office from the parent company One97 Communications. In response, the Payments bank team has now moved to a new facility in Noida.
Paytm Payments Bank is a separate entity, where Vijay Shekhar Sharma owns 51 percent stake while the rest is owned by One97 Communications.
