HIGHLIGHTS
- Paytm Payments Bank officially launched in May 2017.
- In addition, the bank has been instructed to hire an IT auditing company.
- HDFC Bank was forbidden by the RBI from selling new digital products in 2020.
The Reserve Bank of India (RBI) directed Paytm Payments Bank on Friday to cease creating new accounts due to "material supervisory concerns" in the bank.
"The Reserve Bank of India has today, in exercise of its powers under section 35A of the Banking Regulation Act, 1949, asked Paytm Payments Bank Ltd to cease onboarding of new clients with immediate effect," the central bank said in a statement.
In addition, the bank has been required to hire an IT audit firm to undertake a full system audit of its IT system.
"Paytm Payments Bank's onboarding of new clients will be subject to explicit clearance from the RBI after evaluating the IT auditors' findings. This action is based on serious supervisory concerns identified in the bank "It stated.
Paytm Payments Bank was founded in August 2016 and commenced operations in May 2017 with a branch in Noida.
The RBI had restricted HDFC Bank from launching any new digital goods or services or issuing new credit cards till the institution rectified recurrent technical concerns in December 2020.
