Paytm Payments Bank may lose license for flouting RBI's norms
What's the story
The Reserve Bank of India (RBI) is reportedly contemplating revoking the banking license of Paytm Payments Bank Limited (PPBL). It will be for the first time in over two decades that the banking regulator would take such action. As reported by Hindu Business Line, this decision could stem from multiple instances of failed due diligence by Paytm's banking division.
Fine imposed
PPBL fined nearly Rs. 5.5cr for not reporting illegal transactions
On March 2, PPBL was found guilty of not reporting illegal monetary transactions that were facilitated through its accounts. In response, India's Financial Intelligence Unit imposed a penalty of Rs. 5.49 crore on PPBL. The punitive action was taken mainly due to the bank's repeated non-compliance with KYC (Know Your Customer) norms, which have raised concerns about alleged money laundering. RBI's investigation found multiple PPBL accounts bearing the same PAN details and having deposits of crores of rupees.
Safe distance
Paytm's parent company insulates itself from PPBL
On March 1, One97 Communications (OCL), Paytm's parent company, revealed that its board had approved the termination of several inter-company agreements with PPBL. The announcement followed the RBI's imposition of business restrictions on PPBL on January 31, citing repeated violations of norms and non-compliance with multiple rules. The banking regulator has prohibited PPBL from accepting new deposits and conducting credit transactions after March 15.