The Reserve Bank of India is reportedly in discussions about imposing further penalties on Paytm Payments Bank, with a decision expected in the coming days, according to sources familiar with the matter.
Key Takeaway
The Reserve Bank of India is considering imposing further penalties on Paytm Payments Bank, including the potential revocation of its license, following persistent noncompliances and material supervisory concerns.
RBI’s Internal Discussions
Two sources, who requested anonymity as they are not authorized to speak to the press, revealed that the central bank has internally discussed the possibility of revoking the payments bank license of Paytm. The Reserve Bank of India did not respond to a request for comment when approached for a statement.
Compliance Progress and Regulatory Actions
Recent developments have seen the central bank summoning two Paytm officials to its office over compliance progress. Additionally, the RBI issued new restrictions on Paytm Payments Bank, effectively signaling a potential cessation of its operations in less than six weeks.
Impact on Paytm and Regulatory Response
Following the regulatory actions, Paytm announced its decision to discontinue working with Paytm Payments Bank and explore partnerships with other banks for various financial services. The shares of Paytm witnessed a sharp decline of 20% shortly after the market opened on Thursday, triggering the circuit breaker.
Background and Previous Penalties
In 2022, the RBI had imposed penalties on Paytm Payments Bank for violations related to data localization and customer verification. The central bank cited a comprehensive audit by external auditors, which revealed persistent noncompliances and continued material supervisory concerns, warranting further regulatory action.
