With less than two weeks remaining for Paytm Payments Bank Limited (PPBL) to halt its operations, the Reserve Bank of India (RBI) is contemplating an unprecedented move to revoke its banking license, as per reports. Should this action proceed, it would mark the first time in over two decades that the banking regulator has taken such a step.
The report suggests that an administrator may soon be appointed to oversee critical aspects of the bank’s operations, signaling a significant development in the ongoing saga involving PPBL, a banking arm of the major payment platform, Paytm.
The RBI’s decision appears to be spurred by a series of failed due diligence instances on the part of PPBL, according to sources cited in the report. This follows recent events, including the announcement by One97 Communications (OCL), the parent company of Paytm, on March 1. OCL’s board approved the discontinuation of several inter-company agreements with Paytm Payments Bank, further hinting at internal restructuring measures.
Earlier, on January 31, the RBI imposed business restrictions on PPBL due to repeated violations of norms and non-compliance with multiple rules. The banking regulator prohibited PPBL from accepting fresh deposits and conducting credit transactions after February 29. Although initially set for March 1, the deadline for compliance was extended to March 15.
The RBI’s action was driven by a Comprehensive System Audit report and subsequent compliance validation report from external auditors. These reports revealed persistent non-compliance issues and material supervisory concerns within the bank, prompting the need for further supervisory action, as stated by the RBI.
Additionally, the RBI directed the payments bank to settle all pipeline transactions and nodal accounts by March 15, indicating a firm stance on the matter.
The situation surrounding PPBL and its potential license revocation continues to unfold, with stakeholders closely monitoring developments as the March 15 deadline approaches.
