RBI Letter To Paytm Bank Does Not Talk About Data Access: Vijay Shekhar

The Reserve Bank of India in its letter to Paytm Payments Bank has not mentioned anything about data access but has asked the company to carry out an audit from a third party, a top official of the company said on Monday.

Vijay Shekhar Sharma, the chairman of digital financial services firm One97 Communications and the promoter of Paytm Payments Bank (PPBL), told PTI that the bank is a completely Indian owned controlled entity and has built its own system based on technology "made in India".

The RBI last week directed PPBL to stop opening new accounts amid "material supervisory concerns" observed in the bank. The bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system.

Shares of One97 Communications, which holds a 49 per cent stake in PPBL, were hammered on stock exchanges on Monday after reports claimed that PPBL's servers were sharing information with China-based entities that indirectly own a stake in Paytm Payments Bank.

"RBI has clearly articulated a list of tasks that Paytm Bank has to complete and get the audit done. I also want to confirm that none of the obligations mentioned in the letter of observation carries any reference of data access or unauthorised data access or authorised access or data access or data localisation or data system or servers related to any foreign shareholder access or foreign access," Sharma said.

He said that the PPBL uses a system of Infosys and all its data resides in servers that are in India and managed by people of the bank and their technology partners who are in India.

When asked about RBI's direction on the appointment of an IT audit firm, Sharma said, "These are related to IT process systems where they need confirmation and they said instead of self-submission you can get it audited by someone because RBI does that as a process."

Sharma holds a 51 per cent stake in Paytm Payments Bank (PPBL), while the remaining 49 per cent is held by One97 Communications. China-based Alibaba Group is the biggest shareholder in One97 Communications with about 31 per cent stake through its subsidiaries.

"Even today or in the past, there has never been any request from any foreign shareholder of Paytm Payments Banks. Never has been in the past nor it is today. Paytm Bank is a proud data localised firm since its inception.. where no server is kept outside or any outside person has any access to any data or whatsoever," Sharma said.

Paytm Payments Bank was incorporated in August 2016 and formally began its operations in May 2017 from a branch in Noida. As per the last disclosed numbers, PPBL had around 6.4 crore customers.

RBI had prohibited PPBL in June 2018 as well from onboarding new customers on account of supervisory concerns. The restrictions were lifted on December 31, 2018.

Sharma said that there was no penalty imposed at that time by the RBI and the company had explained to the banking regulator that the fault was in the system of the other bank and not in their system.

In another incident, the RBI had issued a show-cause notice dated July 29, 2021, stating that Paytm Payments Bank had committed an offence under the Payment and Settlement Systems Act, 2007, by submitting false information to RBI confirming completion of the transfer of the Bharat Bill Payment Operating Unit business by One97 Communications to PPBL.

The RBI had imposed a penalty amounting to Rs 1 crore on Paytm Payments Bank for the offence.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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