Paytm seeks regulatory guidance with new committee led by former SEBI head

12 Feb 2024 , 11:00 AM

A day after the banking regulator chastised the lender for persistently breaking the rules, the board of One97 Communications Ltd, the company that operates the Paytm payments app, established a panel led by N. Damodaran, a former chairman of India’s markets regulator, to advise Paytm Payments Bank Ltd on compliance and regulation.

The committee, which consists of two more members and is chaired by Damodaran, will collaborate with One97 Communications’ board to enhance compliance and regulatory affairs, the business informed the exchanges.

Along with banker R. Ramachandran, a former chairman and managing director of Andhra Bank, the committee includes M.M. Chitale, a former president of the Institute of Chartered Accountants of India (ICAI) and a former member of the Banking Codes and Standards Board of India’s governing council, according to One97 Communications.

The RBI placed significant business limitations on Paytm Payments Bank on January 31 due to the bank’s persistent failure to comply with prudential requirements.

The panel’s formation was decided upon the day after the RBI criticized the payments bank operations for consistently breaking prudential standards, including as the anti-money laundering and know-your-customer (KYC) rules.

One97 Communications released a statement stating that the management of the company is dedicated to promoting sustainable business growth while abiding by legal and regulatory requirements.

Major KYC norm violations were discovered by the regulator during its investigation, putting clients, depositors, and wallet holders at grave danger. During its investigation, the RBI discovered that the same PAN was associated with over 100 clients in thousands of cases, with the number even exceeding 1,000 in certain instances.

The RBI also discovered a remarkably high quantity of inactive accounts that might have been exploited as mule accounts. Deficits in the KYC procedures and the absence of a transaction monitoring system in the bank raise additional worries about money laundering.

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