The Hindu Business Line reports that with less than two weeks remaining before Paytm Payments Bank Limited (PPBL) ceases operations, the Reserve Bank of India (RBI) may take the unprecedented step of revoking the banking license. If this action is indeed taken, it would mark the first instance in over two decades where the banking regulator has resorted to such measures.
The report suggests that an administrator could be appointed to oversee critical aspects of the bank’s operations.
Citing sources, the report indicates that the RBI’s decision may be driven by repeated instances of failed due diligence by the banking arm of the payment giant Paytm. On March 1, One97 Communications (OCL), the parent company of Paytm, announced the discontinuation of several inter-company agreements with Paytm Payments Bank. This move comes after the RBI imposed business restrictions on the bank on January 31, citing repeated violations of norms and non-compliance with multiple rules. PPBL was prohibited from accepting fresh deposits and conducting credit transactions after February 29, with the deadline later extended to March 15.
The RBI stated that a Comprehensive System Audit report and subsequent compliance validation report by external auditors revealed persistent non-compliance and continued material supervisory concerns within the bank, necessitating further supervisory action. The regulator also directed the payments bank to settle all pipeline transactions and nodal accounts by March 15.
