The Reserve Bank of India (RBI), in its latest order issued today, directed Vijay Shekhar Sharma-led Paytm Payments Bank Ltd to stop the onboarding of new customers. The central bank has said its action is based on “certain material supervisory concerns" observed in the bank.
The Paytm Payments Bank, owned by Softbank-and Alibaba Group-backed One97 Communications, has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system, the RBI order said. “Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing a report of the IT auditors," the central bank said.
“This action is based on certain material supervisory concerns observed in the bank," the RBI said.
A Paytm spokersperson said the company is evaluating the RBI order and will respond soon.
Paytm Payments Bank had earlier said it received over 926 million UPI transactions in December, becoming the first beneficiary bank in the country to achieve this landmark.
In December, the payments bank had received the status of scheduled payments bank.
In the October to December 2021 quarter, Paytm Payments Bank had registered a total of 2,507.47 million beneficiary transactions, compared to 964.95 million in the same quarter in 2020. This is a year-on-year increase of 159.85%.
On March 8, the share price of Paytm had hit a new 52-week low of Rs. 728.50 apiece and has been plunging over the past month amid the battering that the markets.
A month prior, Paytm announced an initial public offering (IPO) at an issue price of Rs 2,150 apiece, commanding a valuation of close to $20 billion. While the largest Indian IPO issue got oversubscribed, Paytm’s equity value got corrected to $14.5 billion on the day of its listing, which was still close to double the size from the closest fintech peer RazorPay.
Paytm was founded in August 2010 by Vijay Shekhar Sharma. Besides US-based Softbank and Chinese Alibaba Group, Paytm Payments Bank's parent One97 Communications also counts SAIF Partners, Alibaba Group's affiliate Ant Group and global billionaire investor-owned Berkshire Hathaway among its key investors.