Paytm Payments Bank anticipates the central bank’s restrictions being eased in three to five months.

According to a top executive at India’s Paytm Payments Bank, which enables transactions on the mobile commerce platform Paytm, the central bank would allow the company to continue taking on new customers in the coming months. The Reserve Bank of India ordered a complete audit of the company’s IT infrastructure in March, citing “material” supervisory concerns and prohibiting it from taking on new customers without providing further details.

The bank and the RBI are working together to complete the IT audit and address the regulator’s concerns. According to the financial chief of Paytm, it will take 3 to 4 months to clear complete complications of the situation

An email requesting comment from the central bank was not immediately returned. Paytm refuted a Bloomberg story in March that its servers were sharing information with China-based companies that had a share in the company indirectly.

Earlier RBI Directs Paytm to stop onboarding customers.

Earlier RBI announced on Twitter regarding ban on Paytm under section 35A of the Banking Regulation Act, 1949. With immediate effect, the RBI has barred Paytm Payments Bank from onboarding new customers, citing ‘material supervisory concerns’ at the bank. It has also instructed the payments bank’s IT audit to be performed by an outside firm. The RBI stated that it would make a decision on enabling Paytm Payments Bank to onboard customers only after evaluating the IT audit report.

“RBI instructed Paytm Payments Bank Ltd to cease membership of new users with immediate effect, in accordance with clause 35A of the Banking Regulation Act, 1949,” the central bank said in a statement.

The move was prompted by serious supervisory concerns at the payments bank, according to the RBI. Paytm has yet to respond to the news. Still, sources say that the RBI’s action could be motivated by a number of factors, including violations of Know Your Customer (KYC) regulations, data storage, data privacy, and data outsourcing.

“Existing Paytm Payments Bank Ltd. customers will be able to continue using the bank’s seamless banking and virtual payment systems without interruption throughout the RBI’s restriction.”

Registered users’ Fixed deposit balances at associated banks and balances in their Paytm Wallet, PPBL funds, FASTag or Wallet Card, and UPI services are all safe and secure.

Any new Paytm app users were able to register Paytm UPI handles and link them to their existing PPBL accounts or other bank accounts. “However, until further notice, new users will not be permitted to apply for PPBL savings or any form of current account and new PPBL wallets.” Paytm Payments Bank was established in August 2016 with its first branch in Noida opening in May 2017.

PPBL had approximately 6.4 crore customers, according to the most recent numbers.

It was not the first time that Vijay Shekhar Sharma’s Paytm and Paytm Payments Banks have had issues with the RBI. Because to supervisory concerns, the RBI prohibited PPBL from adding on new customers

The central bank also issued notice to Paytm Payments Bank alleging that the company had violated the Payment and Settlement Systems Act, 2007, by sending misleading information to RBI certifying the transfer’s completion.

Recently Paytm refuted a Bloomberg story in March that its servers were sharing information with China-based companies that had a share in the company indirectly.

Alibaba Group Holding and its affiliate Ant Group back Paytm in China. Due to rising payment processing, marketing, and staff costs, 97 Communications Ltd, the parent company of fintech business Paytm, posted a larger fourth-quarter loss on Friday.

Deora mentioned that the company would be financially beneficial by Sept 2024. “We are seeing good growth in high margin businesses and as a result, we are seeing improvements in contribution margin”.