Why Paytm Payments Bank is on the central bank’s radar

Why Paytm Payments Bank is on the central bank’s radar

After the budget 2024 Paytm payment bank is in the spotlight. Many Paytm users are moving their accounts to their rivals. Due to material discrepancies and non-compliance issues, Reserve Bank India imposed severe restrictions on Paytm’s banking associates.

Following the safeguard of depositors, the central bank may scrap the bank’s license next month. A proposed move is being made following violations such as non-disclosure of material transactions and misuse of customer documentation rules. 

Paytm’s representation could influence the RBI’s decision, the report said. Several Paytm Bank representatives said they have complied with the regulator’s instructions regarding the recent bank direction.

Let us know about Paytm and its investors and then dive into the cause of falling stocks and conflict on Paytm.

Paytm is a prominent Indian platform for online payments and financial services. Vijay Shekhar Sharma founded the company in 2010 and it has become a leading fintech company in the country.

Paytm was founded and is run by businessman and entrepreneur Vijay Shekhar Sharma. In addition to its mobile recharge and utility bill payment services, the company offers online shopping, ticket booking, insurance, and banking services as well as digital wallets and digital wallet services for mobile phones.

Vijay Shekhar Sharma

The services Paytm offers are:

  1. Digital Wallet: Users can store money digitally and pay for online shopping, utility bills, mobile recharges, and more with Paytm’s digital wallet.
  2. Online Shopping: In addition to electronic products, Paytm offers home goods, fashion products, and groceries via its e-commerce platform.
  3. Ticket Booking: Paytm offers tickets for flights, trains, buses, movies, and events.
  4. Financial Services: Through its subsidiary Paytm Payments Bank, Paytm offers insurance, banking, and wealth management services.

One of India’s most valuable and recognizable fintech brands, Paytm has helped drive digital payment adoption in the country.

Thousands of Accounts Allegedly Created Improperly

Money laundering concerns arose due to the significant value of transactions that exceeded regulatory limits, according to sources quoted by PTI.

According to a report in the Economic Times, a PAN-linked account operated more than 1,000 wallets.

KYC was irregular, exposing customers, depositors, and wallet holders to serious risks.

As Reuters reported earlier, ED will investigate Paytm Payments Bank if it finds evidence of illegal activity.

The ethical standards of One 97 Communications Ltd and Paytm Payments Bank are high. It is our understanding that neither Paytm Payments Bank nor OCL’s founder-CEO has been the subject of any investigation by the Enforcement Directorate relating to money laundering,” a Paytm Payments Bank spokesperson said, PTI reported.

Paytm Payments Bank

Congress Raises Concerns Over Paytm Payment Bank’s ‘Chinese Links’ Amid RBI Action

Prime Minister Narendra Modi’s government failed to curb Paytm Payment Bank, the Congress said when the Reserve Bank of India (RBI) imposed the curbs. Communications in-charge of the Congress party, Jairam Ramesh, states that the NDA government in the Centre failed to keep a check on a Chinese-linked company that has faced penalties in the past.

Jairam Ramesh wrote about the Paytm Payment Bank debacle on microblogging platform X (formerly Twitter). “Why hasn’t the RBI been more vigilant in monitoring a Chinese-linked firm – previously penalized by it for noncompliance in 2022 and at one point owning 31% of shares and investing more than 7000 crores in the firm?”Jairam Ramesh wrote.

“Does this have anything to do with Paytm’s vocal support for the disastrous demonetization decision on 9th November 2016?”

China link to Paytm

Among the largest shareholders of One97 Communications Ltd., the company that owns and operates Paytm, is Vijay Shekhar Sharma. Antfin, an affiliate of China’s Ant Group Co., holds 13.5%.

Paytm Payments Bank Limited is a 49 percent subsidiary of One97 Communications, which owns the Paytm brand.


Read more: How to Buy Bitcoins in India?



Paytm Payments Bank

Paytm Merchants Seek Alternatives as Bank Users Shift Accounts: Rivals Benefit from Migration

On January 31, the Reserve Bank of India (RBI) cracked down on Paytm Payments Bank for noncompliance and uncertainty engulfed large and small businesses in Delhi, Mumbai, Bengaluru, and elsewhere.

The Paytm platform is being ported at no cost to its competitors, such as PhonePe and Google Pay. Several merchants have been contacted and deposits have been transferred.

Payments through Paytm are faster and safer when linked bank accounts are switched, ensuring the safety of the money. The RBI has barred Paytm Payments Bank from offering any banking services including deposits or payments, beginning on February 29. As merchants seek to switch, PhonePe reports an increase in QRs and SmartSpeaker requests. Users and merchants continue to be supported by Google Pay without incentives. As part of the process of migrating about 40 million merchants, Paytm’s COO mentions plans to change banks.

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