With less than two weeks to go for Paytm Payments Bank Limited (PPBL) to cease operations, the Reserve Bank of India (RBI) may take the unprecedented step of revoking the banking licence, the Hindu Business Line has said. If it does go ahead, it would be the first time in more than 20 years that the banking regulator would take such an action.
An administrator might be appointed to oversee critical aspects of the bank’s operations, the report said.
According to a source, the RBI’s decision could be prompted by repeated instances of failed due diligence on the part of the banking arm of the payments major Paytm, the report said.
On March 1, One97 Communications (OCL), the parent company of Paytm, announced that its board had approved the discontinuation of several inter-company agreements with Paytm Payments Bank.
On January 31, the RBI imposed business restrictions on the bank citing repeated violations of norms and non-compliance with multiple rules. The banking regulator barred PPBL from accepting fresh deposits and doing credit transactions after February 29.
The deadline was later extended to March 15.
A Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the bank, warranting further supervisory action, the RBI said.
The RBI also directed the payments bank to settle all pipeline transactions and nodal accounts by March 15.
Source: MoneyControl
