On March 11, the Reserve Bank has banned Paytm Payments Bank from adding new customers. Along with this, RBI has ordered to conduct IT audit of Paytm Payments Bank. The meaning of IT audit is that the company’s IT infrastructure i.e. software is able to bear the burden of many customers, what are the flaws in it and why they are coming, all these will be investigated.
RBI has said, “Paytm Payments bank will have to take RBI’s permission for adding new customers. And new customers will be allowed to add only after reviewing the reports of RBI IT audit.”
When did the business start?
Paytm Payments Bank started functioning on 23 May 2017. On March 9, Moneycontrol had reported that Vijay Shekhar Sharma’s company Paytm Payments Bank was about to apply to the RBI for a Small Finance Bank (SFB) license. A source with knowledge of the matter had told that Paytm Payments Bank can submit the application by June this year. However, before that this decision of RBI has shocked the company.
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A source with knowledge of the matter said that Paytm Payments Bank may submit the application for the small finance bank by May-June this year. Vijay Shekhar Sharma, chairman of Paytm Payments Bank, has a 51% stake in this company.
However, it is not yet known why RBI has taken this action on the company. RBI has so far only said that this step has been taken in view of certain supervisory concerns.
How’s the business?
Paytm Payments Bank had earlier said that with 926 million UPI transactions in December, it has become the first beneficiary bank in the country to achieve this milestone.
Between October and December 2021, Paytm Payments Bank had done 250.74 crore beneficiary transactions. In the same quarter of 2020, this figure was 96.49 crores. It has grown by 159.85% on a year-on-year basis.
According to the website of Paytm Payments Bank, a total of 100 million KYC customers are associated with the company. The company is getting 4 lakh users every month. Along with this, the company claims that it is the largest company to issue FASTag. According to the company’s website, so far it has issued 80 lakh FASTag units.
Earlier RBI had imposed penalty
Earlier in October 2021, RBI had imposed a fine on Paytm Payments Bank for violating certain rules. This penalty was imposed after seeing the final issue of Certificate of Authorization (CoA) of Paytm Payments Bank. After seeing the information given in the final issue, RBI felt that the correct data was not presented in it, after which it imposed a penalty.
What is the condition of the shares of Paytm
The shares of Paytm’s proprietary company One97 Communications have been declining continuously for the past few months. The company’s stock is down 66 per cent from its issue price of Rs 2,150. On Friday, the company’s shares closed 0.55 points higher at Rs 776.15. Today RBI’s decision has come after the market is closed. In such a situation, pressure can be seen on the shares of Paytm on Monday.
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