The Reserve Bank of India (RBI) on Friday directed Paytm Payments Bank Ltd to stop onboarding of new customers with immediate effect. The bank has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system.

The RBI took the decision in exercise of its powers under section 35A of the Banking Regulation Act, 1949.

RBI STATEMENT

“Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing report of the IT auditors. This action is based on certain material supervisory concerns observed in the bank,” RBI said in a statement.

Paytm Payments Bank would be able to onboard new customers subject to specific permission from the RBI after reviewing the IT auditor’s report.

PAYTM PAYMENTS BANK GOT RBI NOD IN DECEMBER

It had received RBI’s approval to function as a scheduled payments bank in December, helping it expand its financial services operations.

Billionaire Vijay Shekhar Sharma, founder of payments firm Paytm, owns 51 per cent of Paytm Payments Bank.

The move comes months after One97 Communications, the payments bank’s parent, saw a dramatically underwhelming listing amid concerns around the company’s valuation.