Following observations made by the Reserve Bank of India, Paytm Payments Bank has ceased the enrolment of new customers on its platform. This happened on 20th June post audit by RBI, which made particular observations about the procedure the company follows in taking over new customers and its adherence to know-your-customer (KYC) norms.
Along with this, Paytm was also recently told to remove Renu Satti as the CEO of the payments bank, where the Reserve Bank of India raised objections about her ability to lead a banking services firm. RBI wants that a banker should run the payments bank.
“RBI has directed Paytm Payments Bank to stop onboarding of new customers with immediate effect,” said a person familiar to the matter. Another person, a company executive, said that Paytm is modifying its “account opening process to introduce ‘current accounts’ due to which new account creation process has been paused”.
Earlier this Friday, Paytm announced the resignation of Satti. The company is still looking for someone to fill up the position of the payment bank’s CEO.
RBI also stated that the company should have better security mechanisms to store customer data and thus, told Paytm Payments Bank to have an office apart from that of parent company One97 Communications. Therefore, Paytm lately shifted its Paytm Payments team to a new facility in Noida.
“Renu Satti will be leading the charge as COO of this new (retail) initiative…She has already resigned from Paytm Payments Bank CEO position and the Bank will soon be recruiting a new CEO,” Paytm said in a statement.
Paytm Payments Bank is a separate venture, of which 51% is owned by Vijay Shekhar Sharma and the rest by One97 Communications.
Apart from this, Paytm is also building P2P logistics with a network spread all over the country. It will be used for intra-city deliveries as stated by the company. The company has already collaborated with a large network of local shops, restaurants, pharmacies, and groceries for accepting payments and will soon extend ‘New Retail’ services to them.
Paytm claims that it has seen a massive growth in adoption of digital payments in tier II and tier III cities that account for 50% of its overall user base.