RBI stops Paytm Payments Bank from onboarding new customers
Synopsis
RBI said that the action was being taken based on certain supervisory concerns observed in the bank.
Reserve Bank of India stops Paytm Payments Bank from onboarding new customers.
In a statement, the RBI said that the action was being taken based on certain supervisory concerns observed in the bank.
The RBI has also directed the bank to appoint an IT audit firm to conduct a comprehensive systems audit of its IT system.
The RBI will take a call on whether to grant permission to Paytm Payments Bank Limited to onboard new customers based after reviewing the report of IT auditors, the statement from the central bank said, adding that the action against Paytm Payments Bank Ltd was taken under section 35 A of the Banking Regulation Act, 1949.
Section 35 A of the Banking Regulation Act
The Act gives the RBI the authority to initiate steps to prevent the affairs of any banking company from being conducted in a manner that is not in the bank depositors' best interest or is prejudicial in some way to the interests of the company.
Restriction under the act also applies if the RBI wants to ensure better government and control within the banking company.
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