Excerpt from NDTV Profit Article – Published on Feb 07, 2024

Paytm Payments Bank Ltd. has initiated steps to engage external auditors for a comprehensive assessment of its compliance and know-your-customer (KYC) processes, according to sources familiar with the matter. According to people who spoke on the condition of anonymity, the bank has distributed a request for proposal (RFP) to external auditors, but the document is still confidential and unavailable to the general public.

According to insiders, the main goal of this RFP is to subject Paytm Payments Bank to a thorough audit focusing on its compliance with regulatory requirements, particularly those set forth by the Reserve Bank of India (RBI). By undertaking this audit, the bank aims to demonstrate its commitment to compliance across all facets of its operations.

The action follows the RBI’s regulatory action against an associate company of One97 Communications Ltd., the parent company of Paytm. On January 31, the RBI imposed restrictions on the associate company, prohibiting it from accepting fresh deposits, top-ups, or credit transactions in its accounts effective February 29. Reports from NDTV Profit highlighted concerns raised by the RBI regarding inadequate KYC procedures, which reportedly facilitated transactions amounting to significant sums. The regulator also identified material lapses in the company’s conduct, prompting stringent measures.

In response to the regulatory crackdown, Vijay Shekhar Sharma, the founder and CEO of One97 Communications, reportedly sought assistance from Finance Minister Nirmala Sitharaman. However, sources with knowledge of the situation indicate that his efforts were unsuccessful, underscoring the seriousness of the situation the company faced in addressing regulatory concerns.

The decision to engage external auditors underscores Paytm Payments Bank’s commitment to transparency and regulatory compliance amidst heightened scrutiny. As regulatory oversight increases, such proactive measures are essential for financial institutions to uphold integrity and regain trust in their operations.

To delve deeper into this topic, please read the full article in NDTV Profit.