Paytm Payments Bank yet to act on RBI’s order, MoS Finance tells Lok Sabha

Paytm Payment Bank is yet to appoint a firm to conduct an audit of its information technology (IT) systems, minister of state for finance Bhagwat Karad told the Parliament.

“The RBI (Reserve Bank of India) has further informed that the Paytm Payments Bank Limited has not yet appointed the IT audit firm to conduct a comprehensive System Audit of the IT system of the bank,” Karad said in a written reply to a question on April 4.

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On March 11, the RBI barred SoftBank-backed Paytm Payments Bank Limited (PPBL) from onboarding new customers and directed it to appoint a firm to conduct an audit of its IT system. Paytm Payments Bank will require specific permission from the RBI to restart accepting new customers after a review of the audit.

Soon after RBI’s action, Paytm Payments Bank had said in an exchange filing that it was taking immediate steps to comply with the directions. It also stated that existing customers will not be affected and they can continue using PPBL banking and payment services.

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The filing noted, “All existing users of Paytm UPI, Paytm Wallet, Paytm FASTag and bank accounts can continue to use these instruments, including debit cards and net banking, for payments”.

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The RBI did not specify the reasons for its action against the Paytm Payments Bank. According to a Bloomberg report, the action followed a leak of data to Chinese authorities. The RBI had found in its annual inspections that Paytm Payments Bank’s servers were sharing information with China-based companies that indirectly own a stake in the bank.

However, Paytm, founder and CEO, Vijay Shekhar Sharma denied the media report, saying the report was “absolutely false” and “completely factually wrong”.

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Paytm Payments Bank joins a growing list of financial companies and lenders, such as Mastercard, Dinners Club, American Express and HDFC Bank that have been penalized for systematic glitches. The Indian banking regulator is eager to build a failsafe payments system in India, where transactions are increasingly done digitally.