Payments banks are simplified versions of regular commercial banks with certain limitations.They can’t offer credit cards or loans and have a maximum balance limit of Rs. 2 lakh.
Paytm Payments Bank was launched in November 2017 and came under regulatory scrutiny in 2018. The bank faced issues with non-compliance to RBI guidelines
The bank failed to comply with KYC norms and anti-money laundering protocols. This included improper checks during customer onboarding, allowing misuse and fraudulent activities
Inadequate KYC procedures led to multiple fraudulent activities, such as using the same PAN Card to open thousands of accounts. Some PANs were linked to over 1,000 accounts, sometimes using fake PAN Cards
In 2021, RBI fined Paytm Payments Bank Rs. 1 crore for significant KYC and anti-money laundering violations, but issues persisted despite the warnings.
In October 2023, RBI fined Paytm Payments Bank Rs. 5.39 crore for continued non-compliance with KYC regulations. Persistent issues led to this substantial penalty.
These regulatory actions have significantly impacted Paytm Payments Bank's operations and credibility. Compliance is crucial for the stability of financial services.