RBI has reportedly asked Paytm Payments Bank to go for physical KYC instead of e-KYCs to add new customers.

RBI questions cashbacks and offers given to Paytm Payments bank account holders
Atom Digital Payments Saturday, August 04, 2018 - 11:13

The Reserve Bank of India has reportedly questioned One97 Communicationed-owned Paytm Payments Bank over cashbacks and has asked it to stop adding more customers to its banking process till the company is able to clear the apprehensions that it has on the cashback and other benefits.

The advice to Paytm Payments Bank is to adopt the physical KYC verification norms if essential and not rely on the e-KYC that it has been doing so far.

The main issue here is One97 Communications is the parent company that owns Paytm the e-wallet, Paytm Mall and the banking licence is in the name of Paytm Payments Bank. Customers who are users of Paytm and are shopping on Paytm Mall are offered many benefits like cashback and discounts and so on. These very same customers are also account holders in Paytm Payments Bank. This relationship across the different arms does not go well with RBI. And this is not the first time this issue has been raised. Paytm is aware of the problem and claims it has set up a separate office to run the Payments Bank operations and to establish that it is a different entity.

It is learnt that Paytm has addressed a reply to RBI explaining its position that it well within the norms and no regulations are being violated. People in the know believe one has to wait till RBI makes its position clear whether it is satisfied with the reply from Paytm.

Fino Payments Bank is another payments bank that was under the RBI scanner recently. Fino was also advised by RBI to put on hold its enrolling new customers. The issue here was RBI found a few customers having more than Rs 100,000 in their accounts. This is not permitted under the terms of operations of payment banks.

You may recall the problems that the Airtel Payments Bank came into when it was taking the unilateral decision of converting its telecom subscribers into account holders without their consent.

Also read: WhatsApp Payments rollout in India faces delay as govt insists on physical office

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