RBI may cancel Paytm Payments Bank's operating licence next month: Report
Violations leading to these measures included the misuse of customer documentation rules and non-disclosure of material transactions.
The Reserve Bank of India may reportedly cancel Paytm Payment Bank's operating licence due to concerns about millions of payments from unverified accounts.
Following a February 29, 2024 deadline set by the central bank, Paytm Payments Bank Ltd has been prohibited from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among other restrictions.
The Reserve Bank of India may take further action after this deadline, and customers of Paytm Payments Bank will be unable to replenish their savings accounts or the widely-used digital payment wallet, Bloomberg reported.
Violations leading to these measures included the misuse of customer documentation rules and non-disclosure of material transactions said Bloomberg citing sources.
The report highlighted that hundreds of thousands of Paytm Payments Bank customers had not submitted the required know-your-customer (KYC) documentation. Additionally, some cases involved the use of a single identity document to register thousands of customers. Transactions amounting to tens of millions of rupees were being conducted in minimum-KYC accounts, raising concerns about potential money laundering activities.
Earlier today, Founder Vijay Shekhar Sharma took to X (formerly Twitter) to reassure shareholders and customers, stating, "Your favourite app is working, will keep working beyond 29 February as usual."
Shares of Paytm parent touched the lower circuit for the second consecutive day on Friday, trading at Rs 487.20 apiece on Indian bourses, down almost 20% from Rs 608.80 earlier. The stocks had declined nearly 20% on Thursday after the RBI made the announcement.
One97 Communications Ltd, the parent company of Paytm, possesses a 49% stake in Paytm Payments Bank Ltd but designates it as an associate rather than a subsidiary. The directive from the RBI is expected to affect the annual operational profit of the company, resulting in an estimated impact ranging between Rs 300 crore and Rs 500 crore.
Edited by Kanishk Singh