Paytm Payments Bank License at Risk, Says Report

4 Mar 2024 , 11:31 AM

With less than two weeks until Paytm Payments Bank Limited (PPBL) ceases operations, the Reserve Bank of India (RBI) may take the extraordinary step of withdrawing the bank’s licence, according to the reports. If it goes forward, it will be the first time in more than 20 years that the banking regulator has taken such action.

The study stated that an administrator might be appointed to oversee essential areas of the bank’s operations.

According to a source, the RBI’s decision may have been spurred by numerous instances of failed due diligence on the side of Paytm’s banking unit, the article states.

On March 1, One97 Communications (OCL), Paytm’s parent company, reported that the board had authorised the termination of certain inter-company agreements with Paytm Payments Bank.

On January 31, the RBI placed business limitations on the bank, alleging recurrent breaches of standards and noncompliance with many rules. The banking authority prohibited PPBL from receiving new deposits or conducting credit operations from February 29.

The deadline was later extended till March 15.

A Comprehensive System Audit report and following compliance validation report by external auditors indicated recurrent noncompliance and serious supervisory issues in the bank, necessitating additional supervisory action, according to the RBI.

Following this development, Paytm’s counter fell to an intraday low of ₹400.

At around 10.05 AM, One97 Communications was trading 2.79% lower at ₹402.85, against the previous close of ₹414.40 on NSE.

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