According to sources, the Reserve Bank of India is considering the cancellation of Paytm Payments Bank’s operating license as early as next month, once depositors are protected. The bank’s shares have fallen by 20% on both Thursday and Friday, resulting in a $2 billion reduction in the company’s value. The RBI has instructed Paytm to cease its mobile wallet business, and other activities because it is breaking the rules. This is a significant issue for Paytm since it is owned by another company called Paytm. Paytm’s shares have fallen by over 70% since its inception in 2021.
The RBI has told Paytm to stop its mobile wallet business and other operations. Failure to comply with the regulations may result in the RBI revoking the company’s license. Bloomberg reports that the RBI may make the decision to revoke Paytm’s license after February 29. This is when the bank must stop accepting deposits into savings accounts via the digital payment wallet. It is important to note that the final decision is still pending and may be influenced by Paytm’s representation to the RBI.
The possible cancellation of the license is due to various violations, including breaches of customer documentation rules and non-disclosure of significant transactions. Paytm’s banking division has come under scrutiny for enrolling numerous customers without proper know-your-customer verification, and transactions beyond regulatory limits have raised serious concerns. A Paytm Bank representative stated that the RBI’s directive is part of an ongoing supervisory engagement and compliance process. They also confirmed the bank’s compliance with the regulator’s instructions.
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