Reserve Bank of India (RBI) has stopped Paytm payments bank from adding new customer since 1st August 2018. RBI has shown their dissatisfaction in the process approached by Paytm Payments Bank in acquiring new customer and process follows in adhering KYC norms. Paytm stopped enrolling new customers on 20 June following an audit by RBI.
It is said that Paytm is modifying its “account opening process to introduce ‘current accounts’ due to which new account creation process has been paused”.
Observations by RBI
- Paytm was asked to remove Renu Satti as chief executive of the payments bank. RBI has objected her ability to lead a banking services firm. As per the license terms, the chief of any payments bank will have to be a banker.
- Paytm is not having the secured mechanism to store the customer data. RBI asked them to have a separate office for Paytm Payments Bank.
- Existing Account opening process with extant Know Your Customer (KYC) guidelines.
The entire user data in the Paytm app goes into a “data lake”, and a team in Canada uses it to formulate the rules of the risk engine and other software. The data lake is a repository of multiple sources of data including phone usage and behavioral data.
Algorithms use the data so the alerts and promotions are automated and personalized.