In a recent announcement, the Reserve Bank of India (RBI) revealed that the enforcement action taken against Paytm Payments Bank stemmed from its ongoing failure to comply with regulatory standards. Deputy Governor Swaminathan J affirmed the central bank’s commitment to monitoring Paytm Payments Bank closely and pledged to take appropriate measures as necessary in the future. RBI Governor Shaktikanta Das, addressing the media, underscored that the stringent measures were implemented due to the severity of the breaches.
Governor Das emphasized that all actions taken by the RBI are driven by the imperative of safeguarding systemic stability and protecting the interests of customers. He clarified that the imposed restrictions were commensurate with the seriousness of the infractions. Additionally, Governor Das noted that when attempts at constructive engagement fail, the RBI resorts to imposing business restrictions.
Regarding specific details of the case, Governor Das mentioned that granular information cannot be disclosed at this time. However, he assured the public that a comprehensive FAQ document addressing common queries would be released by the following week, acknowledging the public’s curiosity surrounding the issue.
The RBI’s directive, issued last week, mandated Paytm Payments Bank to cease accepting new deposits in its accounts and digital wallets starting March, citing supervisory concerns and non-compliance with regulations. One of the primary reasons behind this action was the discovery of hundreds of accounts on Paytm Payments Bank lacking proper identification, posing a significant risk of potential money laundering. These accounts, with insufficient Know Your Customer (KYC) verification, facilitated transactions worth millions of rupees on the platform. Moreover, auditors found discrepancies in the compliance submissions made by the bank during verification processes conducted by both the RBI and external auditors, further exacerbating the situation.