The action followed ‘material supervisory concerns’ at the payments bank, the RBI said in a statement on its website. The RBI, however, did not provide any further details.
The stricture has been imposed on Paytm under Section 35A of the Banking Regulation Act.
Section 35A allows the regulator to prevent the affairs of any banking company in a manner which is detrimental to the interest of depositors.
A payments bank can collect deposits from its customers. However, it is not allowed to extend any loans from its balance.
In a statement the RBI said that ‘The bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system.’
Onboarding of new customers will be subject to specific permissions by the banking regulator, after it has reviewed the report by the IT auditors.
Paytm Payments Bank had received its banking licence in May 2017.