Paytm has gained a lot of popularity over the past few years, trying to allure its users through exciting cashbacks and attractive offers. In an attempt to retain its current user base and to further expand it, Paytm launched Paytm Payments Bank in November last year. The plan was working smoothly, until recently, the enrolment of new customers stopped on the platform.
According to sources, Paytm halted the registration of new customers on the 20th of June this year, owing to an audit by the Reserve Bank of India (RBI).
Paytm is not the first company to have been cracked down by the RBI. Earlier, Airtel and Airtel Payments Bank were forbidden to perform their operations by RBI – albeit due to different reason – and have begun functioning recently after a 10-month ban.
RBI Displeased With Paytm Payments Bank
As revealed by the sources, RBI has ordered Paytm Payments Bank to stop the enrolment of new customers on its platform without any further delay. The audit issued by RBI has made a few observations regarding the process that the company undergoes to acquire new users. Not only this, Paytm Payments Bank’s adherence to KYC (Know-Your-Customer) norms is also being questioned.
However, Paytm is not being upfront regarding the whole situation, and is, apparently, trying to cover up the matter. A company executive quoted that Paytm has suspended the registration of new accounts for now because it is introducing “current accounts” facility on its platform.
Renu Satti Resigns As CEO
Few sources claim hat the Vijay Shekhar led digital payments platform was also instructed to remove Renu Satti as a chief executive officer of the payments bank. RBI felt that she did not have enough capability to lead a banking services firm. According to the Reserve Bank of India norms, one has to be a banker before they head out to become the Chief Executive of any Payments bank.
Paytm yet again warded off the news by quoting, “This is incorrect… Renu Satti’s appointment was made on 19th May 2017 vide an official approval from RBI.”
However, during a conference on Friday, Paytm confirmed that Satti has resigned from her current position as CEO of the Paytm Payments Bank on 28 July. Nonetheless, she would fill in a new position within the company – and would be the Chief Operating Officer (COO) at Paytm, directing the new retail business on the platform. As of now, nobody has occupied the position left behind by Renu Satti.
RBI Comes Hard On Paytm
RBI is sceptical regarding the security mechanism used by the platform to keep its customers’ data. Moreover, Paytm Payments Bank has been asked to move to a different office instead of residing in the same office as that of One97 Communications Ltd. Following the instructions, the organization recently shifted its Payments bank to a different office located in Noida.
The growth of Paytm has been exponential as it achieved an annual run rate of 5 billion digital transactions and $ 50 billion GTV (Gross Transaction Value) in July 2018. Paytm is also the largest contributor to all forms of digital payments including UPI, Wallet and Cards since January 2018. In January, the company had also begun to distribute the physical debit card to the users who had a payments bank account.
Paytm directly competes with a lot of wallets in India, such as FreeCharge, PhonePe, JioMoney and MobiKwik. The use of digital currency is increasing rapidly and the number of mobile payment users in India is expected to reach 77.8 million in 2018. That’s is nearly 30% of India’s total smartphone users.