Last week, the Reserve Bank of India (RBI) directed the Paytm Payments Bank to immediately stop onboarding new users over “certain material supervisory concerns observed in the bank”. The latest Bloomberg report reveals that the payments bank was sharing information with Chinese entities that indirectly own a stake in Paytm Payments Bank, which goes against RBI’s guidelines. The report didn’t reveal the kind of data that was shared with China.
As per RBI’s guidelines, all payment companies operating in the country should ensure that the transaction’s data is stored exclusively on local servers. The Bloomberg report suggests otherwise for the Paytm Payments Bank.
Paytm denies data leak claims
Commenting on the matter, a Paytm Payments Bank spokesperson denied the data leak claims and said that “the recent Bloomberg report on Paytm Payments Bank claiming data leak by Chinese firms is completely false and simply sensationalizing”.
“Paytm Payments Bank is proud to be a completely homegrown bank and is fully compliant with RBI’s directions on data localisation. All of the Bank’s data resides within the country. We are true believers of the Digital India initiative, and remain committed to driving financial inclusion in the country,” the spokesperson added.
Last week, the central bank also asked the payments bank to appoint an external firm to conduct a comprehensive IT audit.
RBI’s directive to Paytm Payments Bank
RBI’s directive issued last week noted, “in exercise of its power, inter alia, under section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank Ltd to stop, with immediate effect, onboarding of new customers”.
“Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by the Reserve Bank of India (RBI) after reviewing (the) report of the IT auditors,” the central bank added in a statement issued last week.
The platform reassured that it is currently taking the necessary steps to comply with the directives of the RBI. In a comment to the Economic Times (ET), a Paytm Payments spokesperson said, “we assure you that the recent RBI direction will not impact our existing customers in any way and they can continue to use our banking services seamlessly We are taking necessary steps to comply with the directions of RBI and committed to minimize any inconvenience caused to our customers”.
As per Paytm Payments Bank’s official website, the platform currently has more than 300 million wallets and 60 million bank accounts. The existing users are still able to use the payments platform for transactions. India Today