The Reserve Bank of India (RBI) has taken action against fintech firm Paytm for sharing data with Chinese companies. According to a Bloomberg report, the RBI in a March 11 order barred Paytm Payments Bank from adding new customers as it allowed its data to go to foreign servers, which are India’s data. There was a violation of localization rules. Apart from this, he did not even verify his customers properly.
According to a Bloomberg report, the RBI in its annual investigation found that the company’s servers were sharing data with certain firms based in China, which indirectly have some stake in Paytm Payments Bank.
What did Paytm say on this report?
A spokesperson for Paytm Payments Bank said on this report, “A recent report by Bloomberg claims that Paytm Payments Bank used to leak data to Chinese firms, which is completely false and an attempt to sensationalize the matter.” Paytm Payments Bank is proud to be a fully indigenous bank and is fully compliant with RBI directives of data localization. All the data of the bank resides within the country. We are true believers of Digital India initiative and the country Committed to promoting financial inclusion in the
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Paytm Payments Bank is a joint venture between Paytm and its founder Vijay Shekhar Sharma. According to information sent to the stock exchanges, China’s Alibaba Group Holdings and its subsidiaries also hold stake in Paytm, which is part of Chinese billionaire Jack Ma’s Ant Group.
IT audit will also have to be done
Earlier, on March 11, RBI had ordered an IT audit on Paytm Payments Bank along with a ban on adding new customers. IT audit means that the company’s IT infrastructure i.e. software is capable of bearing 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.”
Small finance bank’s plan may get a setback
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 RBI’s decision has shocked the company.
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