Paytm Payments Bank was punished by the Reserve Bank of India for sharing data with a Chinese entity
- ByStartupStory | March 14, 2022
The RBI stopped Paytm Payments Bank from accepting new customers on March 11 because it enabled data to flow to servers outside of India in violation of Indian rules and failed to properly authenticate its customers, according to a person familiar with the situation.
According to the source, the Reserve Bank of India’s annual inspections discovered that the company’s servers were sharing information with China-based organizations that indirectly held a part in Paytm Payments Bank.
Paytm Payments Bank is a joint venture between Paytm and Vijay Shekhar Sharma, the company’s creator. According to exchange filings, Alibaba Group Holding and its affiliate, Jack Ma’s Ant Group, possess shares in Paytm.
Paytm Payments Bank was stopped from enrolling new customers by the RBI on Friday, citing “material supervisory concerns.” The bank instructed it to hire an IT auditing firm to conduct a complete system audit of its IT infrastructure.
According to its website, Paytm Payments Bank has over 300 million wallets and 60 million bank accounts. One 97 Communications Ltd, Paytm’s parent firm, saw its stock drop more than 13% on Monday.
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