Three weeks ago, on March 11th, Paytm Payments bank were legally restricted to register any new customers by the Reserve Bank of India. According to multiple sources, Paytm dipped their feet into too many directions and it was very difficult to explain their business model accurately. Due to low clarity and transparency, the top financial institution of the country was forced to restrict Paytm’s actions and told them to hire a third-party firm to conduct a comprehensive audit so the government has more of a clarity about the start-up.
Almost a month has flown by and the Indian e-banking firm still have not hired a firm to commence the audit. Due to this the Paytm still cannot register and new customers which is quite concerning for the company.
As of April 4th, the Lok Sabha was informed that Paytm payments bank still have not hired any third party to conduct the audit and that almost no progress has been made since new customers have been barred from using the Paytm Payments Bank services.
The Central Bank then announced that new customers will only be allowed to avail the Paytm Payments Bank’s only if they receive special permission after they review the reports of the comprehensive audit.
The day after the Central Bank announced their orders on the company, Paytm Payments Bank said that they have already taken the necessary steps to do get through this time smoothly. Three weeks have passed since this statement and the company has made almost no progress.
While the main reason for this situation is mainly due to a lack of transparency and clarity on the business model from the government’s perspective, another reason has been popping out from the company recently. According to a few sources, Paytm Payments Bank might have accidentally leaked some of their customer data to Chinese firms. According to those sources, the Reserve Bank of India discovered that in an inspection that Paytm Payments bank were sharing some of their data with firms based in the Chinese state as the firms indirectly have invested and own some shares in the Indian based banking and finance app.
This is clearly a violation of security according to the Indian government as data is literally gold in today’s digital world. The fact India’s biggest rivals now have some sensitive and confidential data on Indian consumers does not bode well for the Indian government and hence they require the company to undergo an audit.