RBI Ordered PayTM Payment Bank to Stop Enrolling New Customers and Remove its CEO

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Since 20 June 2018, Paytm has stopped enrolling new customers which was due to the fact that India’s central bank RBI had mandated the company to do as RBI has made certain observations about the process Paytm Payments Bank follows in acquiring new customers and its adherence to KYC norms, reported Live Mint, citing four people privy to the matter.

“RBI has directed Paytm Payments Bank to stop onboarding of new customers with immediate effect,” said one of the four people.

According to the report, Paytm is modifying its “account opening process to introduce ‘current accounts’ due to which new account creation process has been paused”.

 

In addition to this, RBI has also asked Paytm to remove Renu Satti as chief executive of the payments bank following the central bank’s objections about her ability to lead a banking services firm. According to a certain protocol, RBI requires a person to be a banker in order to become the chief executive of a payments bank.

However, PayTM officials has backed Renu Satti as the firm’s CEO stating that her appointment was made vide an official approval from RBI, on 19th May 2017.

On 28 July, the PTI reported that Satti has resigned and will now head Paytm’s new retail initiative. Paytm is yet to fill the position of the payment bank’s CEO.

Going forward, RBI also observed that Paytm should have better security mechanisms to store customer data and asked Paytm Payments Bank to have an office separate from that of its parent firm,One97 Communications Ltd. The company recently moved its Paytm Payments team to a new facility in Noida.

It may recalled that, in May this year a sting operation alleged that PayTM has given its users’ data without their consent.

Paytm Payments Bank is a separate entity, with 51% owned by Vijay Shekhar Sharma and the rest held by One97 Communications.

Recently, it was also reported that Japan’s SoftBank is close to announce its new mobile digital payments service for Japan in collaboration with its Indian portfolio startup PayTM. SOftbank is expected to launch the payment service at the end of 2018.

One97 Communications, the parent of Paytm, has raised over $2 billion since its inception, and is currently valued at over $10 billion.

[Top Image – Asianage.com]

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