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RBI directs Paytm Payments Bank to stop onboarding new customers

This comes a few months after RBI imposed a penalty of Rs 1 crore on Paytm.

The Reserve Bank of India, under Section 35A of the Banking Regulation Act, 1949, has directed Paytm Payments Bank Ltd to stop on-boarding new customers with immediate effect, the central bank said in a press release. Section 35A of the Banking Regulation Act, 1949 states that the RBI, in public interest or interest of banking policy or to prevent affairs of the concerned company to harm depositors, can issue directions to the said banking companies with which it would be bound to comply. The RBI also directed Paytm Payments Bank Ltd to appoint an IT audit firm to conduct a system audit of its IT system. "On-boarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing report of the IT auditors," RBI said. This comes a few months after RBI imposed a penalty of Rs 1 crore on Paytm Payments Bank for allegedly making false statements or willfully omitting to make material statements (Section 26(2) of the PSS Act). Apart from that, the startup also went public last year but its tepid listing has raised concerns among investors about its profitability. Did Paytm Payments Bank share data with Chinese entities? The bank, responsible for processing transactions for Paytm, was barred because it violated rules by allowing data to flow to servers abroad and didn’t properly verify its customers, according to a Bloomberg report. An inspection by the RBI found that the company’s servers were sharing information with China-based…

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Among other subjects, I cover the increasing usage of emerging technologies, especially for surveillance in India

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