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How Paytm Payments Bank came under RBI lens: 1,000 Accounts linked to 1 PAN and more – Times of India

Last week, the Reserve Bank of India (RBI) barred Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024. The regulatory actions include restrictions that essentially bring Paytm’s deposit operations in payments bank, wallets, FASTags, and National Common Mobility Cards to a virtual halt. However, the reason behind the severity of the RBI action so far has not been clear. Now it reportedly seems that Paytm Payments Bank crisis may be the result of KYC issues.
According to a report in NDTV, hundreds of accounts created on Paytm Payments Bank without proper identification were one of the major reasons for the Reserve Bank of India (RBI) to impose curbs on the company. The report quotes people familiar with the matter. These accounts with improper Know-Your-Customer (KYC) are said to have conducted transactions worth crores of rupees on the platform, leading to fears of potential money laundering.
More than 1,000 users were reportedly found to have linked the same Permanent Account Number (PAN) to their accounts. The compliance submitted by the bank is said to be incorrect during verification processes conducted by both the RBI and auditors. As per sources, an “unusually” high number of dormant accounts were also found. TOI’s sister publication Economic Times reported on February 3 that the RBI had alerted the Enforcement Directorate (ED) a few months ago about possible violations of anti-money laundering provisions and know-your-customer (KYC) norms at Paytm.
Sources said that RBI is concerned that some of the accounts could have been used for money laundering. The company, however, maintained there are no ongoing ED probes into the company or founder Sharma.
Financial services secretary Vivek Joshi said the RBI may come out with some clarification in the Paytm case considering its large user base, noting that the banking regulator had taken action in the interest of consumer protection.

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