India’s central bank has implemented stringent new restrictions on Paytm Payments Bank following a critical compliance review by external auditors.
The RBI had previously ordered the bank, a division of the payments technology leader, to cease onboarding new customers back in March 2022 due to compliance issues. A thorough systems audit conducted at the request of the central bank has uncovered “persistent non-compliances and continued material supervisory concerns,” prompting additional supervisory measures.
As a result, the RBI has mandated that, starting at the end of February, no further deposits, credit transactions, or top-ups will be allowed in any customer accounts or mobile wallets. Additionally, the bank is prohibited from providing other banking services, including fund transfers, BBPOU, and UPI facilities. However, customer withdrawals will still be permitted.
In another significant move, the RBI has directed the termination of the Nodal Accounts associated with Paytm’s parent company, One97 Communications Ltd, and Paytm Payments Services.