The Reserve Bank of India (RBI) may cancel the banking licence of Paytm Payments Bank (PPBL), with only two weeks left for Paytm to cease operations, as per report. If the licence gets cancelled then it would be the first time in over 20 years that the banking regulator would take such an action.
It is also reported that to supervise critical aspects of the bank’s operations, an administrator might get appointed.
According to a source, the RBI's decision could be prompted by repeated instances of failed due diligence on the part of the banking arm of the payments major Paytm, the report said.
The parent company of Paytm, One97 Communications, on March 1 announced that its board had approved the discontinuation of several inter-company agreements with Paytm Payments Bank.
The RBI on January 31 imposed business restrictions on the bank after repeated violations of norms and non-compliance with multiple rules. The banking regulator barred PPBL from accepting fresh deposits and doing credit transactions after February 29.
Later, the deadline was extended to March 15.
A Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the bank, warranting further supervisory action, the RBI said.
The RBI also directed the payments bank to settle all pipeline transactions and nodal accounts by March 15.
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