Paytm Payments Bank's independent director, Manju Agarwal, resigned from the board after an RBI order imposed restrictions on the bank's operations.
The move comes in the wake of the regulatory order, which directed the bank to cease accepting deposits or top-ups in various customer accounts and instruments after February 29.
"Paytm Payments Bank independent director Manju Agarwal has resigned from the company's board after RBI order," the source said.
Paytm Payments Bank, affiliated with One97 Communications Limited, has faced regulatory scrutiny in the past. The RBI had previously prohibited the bank from opening new accounts and wallets in 2018 due to supervisory concerns, although these restrictions were later lifted. However, subsequent issues arose, including failures in monitoring account activity and non-compliance with KYC provisions.
RBI rejected Paytm Payments Services Ltd's (PPSL) application to operate as a payment aggregator on November 25, 2022. The banking regulator asked the firm to re-submit applications within 120 days after it gets government approval for an investment made by OCL into PPSL as per FDI guidelines.
The regulator asked PPSL to continue operations with the condition that no new merchants should be onboard. After the completion of 120 days, RBI again granted PPSL an extension, but without removing the bar on new merchant onboarding.
On October 1, 2021, a penalty amounting to Rs 1 crore was imposed on PPBL for a contravention of the Payment and Settlement Systems Act, 2007.
The RBI imposed a penalty of Rs 5.93 crore on PPBL on October 10, 2023, after it found several non-compliances, including banks failure to identify beneficial owners in respect of entities on-boarded by it for providing payout services.
RBI found that PPBL did not monitor payout transactions and carry out risk profiling of entities availing payout services, breaching the regulatory ceiling of end-of-day balance in certain customer advance accounts availing payout services.
The banking regulator found that PPBL reported a cyber security incident with delay and failed to implement device binding control measures related to the 'SMS delivery receipt check'.
PBL video-based customer identification process infrastructure failed to prevent connections from IP addresses outside India.
(With PTI inputs)
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