India’s central bank, the Reserve Bank of India (RBI), has imposed a penalty of 53.9 million rupees ($647,762.58) on Paytm Payments Bank for non-compliance with various provisions, including Know Your Customer (KYC) directions. The RBI revealed that the bank failed to identify beneficial owners of entities using its payout services and did not monitor payout transactions or carry out risk profiling. This penalty comes after the RBI barred Paytm Payments Bank from onboarding new customers last year and ordered a comprehensive audit of its IT systems. The RBI cited ‘material’ supervisory concerns observed in the bank. Paytm Payments Bank also breached the regulatory ceiling of end-of-the-day balance in certain customer advance accounts availing payout services, according to the RBI. Additionally, the bank reported a cybersecurity incident with a delay. Paytm Payments Bank is a major player in India’s digital payments sector, competing with platforms like Google Pay and PhonePe. In August, Paytm’s founder and CEO, Vijay Shekhar Sharma, became the largest shareholder in the company after Chinese firm Antfin sold its stake. This move raised concerns about Chinese ownership in Indian fintech companies. Earlier this year, Alibaba Group, another Chinese company, sold its remaining stake in Paytm for about 13.78 billion rupees. Paytm Payments Bank is a subsidiary of Paytm, which offers a range of financial services in India, including digital wallets, payments, and banking. It remains to be seen how this penalty will impact Paytm Payments Bank’s operations and its reputation in the Indian market.
