The Reserve Bank of India today said that the clampdown on Paytm Payments Bank was a result of persistent non-compliance of the regulator’s norms. RBI Deputy Governor Swaminathan J said that they are monitoring Paytm Payments Bank and will take suitable steps as warranted going forward.
Addressing the media, RBI Governor Shaktikanta Das also said the strict action was taken keeping in mind the gravity of the violation.
“All actions of RBI are in best interest of systemic stability, protection of customers’ interest. Restrictions are always proportionate to the gravity of the situation,” Mr Das said.
“When constructive engagement doesn’t work we go for imposing business restrictions,” the Governor added.
Shaktikanta Das said that he cannot disclose the granular details of the case, but will issue a FAQ by next week as they have received several queries from the public.
The RBI last week ordered Paytm Payments Bank to stop accepting new deposits in its accounts or popular digital wallets beginning March, citing supervisory concerns and non-compliance with rules.
Hundreds of accounts created on Paytm Payments Bank without proper identification were one of the major reasons for the Reserve Bank of India to impose stringent curbs on the company. These accounts with inadequate Know-Your-Customer (KYC) conducted transactions worth crores of rupees on the platform, leading to fears of potential money laundering.
More than 1,000 users were found to have linked the same Permanent Account Number (PAN) to their accounts. The compliance submitted by the bank was found to be incorrect during verification processes conducted by both the RBI and auditors.