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Paytm Payments Bank: 1 PAN And 1000 Accounts Linked; Here’s How Paytm Has Come Under RBI’s Lens

It's unclear why the RBI has taken such severe action thus far. According to reports, KYC problems could cause the Paytm Payments Bank disaster.

Edited By : simran rajpal | Updated: Feb 8, 2024 11:26 IST
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The Reserve Bank of India (RBI) banned Paytm Payments Bank Ltd (PPBL) last week from taking any more deposits or top-ups in wallets, prepaid cards, user accounts, or FASTags after February 29, 2024. Restrictions imposed by the regulatory actions effectively stop Paytm’s deposit activities in wallets, payment banks, FASTags, and National Common Mobility Cards.

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Nevertheless, it’s unclear why the RBI has taken such severe action thus far. According to reports, KYC problems could cause the Paytm Payments Bank disaster.

Why Is The Paytm Payments Bank Targeted By RBI 

One of the main causes of the Reserve Bank of India’s (RBI) restrictions on Paytm Payments Bank was the creation of hundreds of accounts there without the required documentation. Reporters who are acquainted with the situation are quoted. There are concerns about possible money laundering because these accounts with incorrect Know-Your-Customer (KYC) allegedly have made transactions on the site worth crores of rupees.

It was discovered that over one thousand individuals had connected their accounts to the same Permanent Account Number (PAN). It is alleged that the bank’s compliance was submitted in error throughout RBI and auditor verification procedures. An “unusually” high number of dormant accounts were also discovered, according to sources. The RBI is worried that some of the accounts may have been used for money laundering, according to sources.

The company, however, maintained there are no ongoing ED probes into the company or founder Sharma. The RBI alerted the Enforcement Directorate (ED) a few months ago about possible violations of anti-money laundering provisions and know-your-customer (KYC) norms at Paytm.

Customer Protection With The Company 

Given Paytm’s substantial user base, Financial Services Secretary Vivek Joshi hinted the RBI would provide some clarification on the matter. He added that the banking authority has acted to safeguard consumers.

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First published on: Feb 08, 2024 11:26 AM IST

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