The restrictions imposed on Paytm Payments Bank was reportedly due to major lapses in Know-Your-Customer (KYC) procedures, as per a report by NDTV profit.
This includes material lapses and governance issues, raising supervisory concerns, including over 1,000 users linking the same PAN to their accounts.
The report further said that the central bank also found loopholes in the governance standards at Paytm Payments Bank, in terms of linkage between the payments entity with its parent company One97 Communications Ltd.
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Not only this, transactions routed through the parent app raised data privacy concerns. While the recent RBI measures won't impact user deposits in saving accounts, wallets, FASTags, and NCMC accounts until February 29, Paytm Payments Bank must now explore third-party banks to conduct its operations, as stated in an exchange filing on February 1.
Paytm CEO issued clarification
Digital payments and services app Paytm is working and will continue to work as usual even after February 29, its CEO Vijay Shekhar Sharma said on Friday.
The founder and CEO of One97 Communications Ltd (OCL), which owns Paytm brand, on social media platform X said the company is committed to serving the nation in full compliance.
"To every Paytmer, Your favourite app is working, will keep working beyond 29 February as usual," Sharma said.
RBI has barred Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024.