As the deadline looms for Paytm Payments Bank Limited (PPBL) to halt operations within two weeks, the Reserve Bank of India (RBI) is reportedly considering an unprecedented move: revoking the banking licence, according to the Hindu Business Line. Should the RBI proceed, it would mark the first instance in over two decades that the banking regulator has taken such drastic action.
The report suggests that an administrator could be designated to supervise vital functions within the bank, as stated. Citing a source, the decision by the RBI might stem from recurring instances of deficient due diligence within the banking division of Paytm, the report added.
On March 1, One97 Communications (OCL), the parent company of Paytm, disclosed that its board had sanctioned the termination of numerous inter-company agreements with Paytm Payments Bank.
On January 31, the RBI imposed business constraints on the bank, citing recurrent breaches of regulations and failure to comply with multiple rules. The banking regulator prohibited PPBL from accepting new deposits and engaging in credit transactions after February 29.
The deadline was subsequently pushed to March 15.
According to the RBI, a Comprehensive System Audit report and subsequent compliance validation report by external auditors uncovered ongoing non-compliance and persistent significant supervisory concerns within the bank, necessitating additional supervisory measures.
Additionally, the RBI instructed the payments bank to settle all pending pipeline transactions and nodal accounts by March 15.