Paytm Payments Bank is still not allowed to add new customers, says CEO

Paytm Payments Bank is still not allowed to add new customers and there is uncertainty over when this restriction would be lifted, said Paytm founder and Chief Executive Officer Vijay Shekhar Sharma.

At a mutual fund summit on Thursday, Sharma said he had a meeting with Reserve Bank of India (RBI) officials on the issue earlier during the day, but refrained from divulging details of the meeting. RBI had earlier directed the payments bank to stop adding new customers in July end. Shortly after, the central bank also, reportedly, asked Fino Payments Bank to stop enrolling new customers. 

In December last year, Airtel Payments Bank's licence was suspended for opening bank accounts of its telecom users without their consent. However, it received approval to open new accounts in July. 

Chief executives of two payment banks, Airtel and Paytm, stepped down following a scrutiny by the RBI.

While Airtel Payments Bank CEO Shashi Arora resigned, Renu Satti stepped down from her position as the chief executive to take charge as chief operating officer for Paytm's new retail initiative.  

Of late, the payments banks have come under the regulator's scanner owing to lapses on their part in submitting Know Your Customer (KYC) requirements, sources in the know said. 

In February, RBI had directed payments banks to get their customers' information verified by third parties. The central bank has also been stressing that payments banks must meet the same standards of data privacy and security as followed by other banks.  

The cost to bring more customers on board increased sharply for payments banks owing to the RBI's stringent KYC norms, prompting them to cut corners while using electronic KYC, said an industry player. 

Currently there are four payment banks operating in the country - Paytm, Airtel, Fino and Aditya Birla-Idea Payments Bank. India Post Payments Bank will start its operations on September 1.