The Reserve Bank of India (RBI) is likely to cancel the banking licence of crisis-hit Paytm Payments Bank, according to a Hindu Business Line report on Monday. Apart from revoking the licence, the report said, the RBI is also likely to appoint an administrator to oversee the daily operations.
In case the RBI revokes the licence, it would be the first such instance in the banking sector in 20 years.
According to the Hindu Business Line report, the RBI has taken into account diligence failure on the part of Paytm Payments Bank on at least four occasions. The report also said that while there were many banking majors interested in the acquisition of Paytm Payments Bank, however, ‘inadequate KYC compliance’ proved to be a big hindrance.
On March 1, Paytm announced that it had mutually agreed to discontinue various inter-company agreements with Paytm Payments Bank (PPBL). Paytm said the company and its associate entity, PPBL, introduced additional measures to strengthen their approach towards independent operations of PPBL.
On January 31, the banking regulator had decided to bar PPBL, which houses all of Paytm’s 330 million wallet accounts, from accepting deposits or top-ups in any customer accounts, wallets, FASTags and other instruments after February 29. However, later, the RBI extended the deadline by 15 days till March 15, 2024.
The deadlines were extended on services like top-ups and fund transfers, while the remaining PPBL services would be shut on February 29 only.
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