Paytm Payments Bank, which processes transactions for digital payment giant Paytm, said today that a report alleging it leaked data to Chinese companies is “false and sensational”. Last week, the RBI had told Paytm to stop enrolling new customers.
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Bloomberg news agency had reported that the RBI or Reserve Bank of India had discovered that the company’s servers were sharing information with China-based entities that indirectly hold an interest in the Paytm payment bank.
The company released a denial today. “Paytm Payments Bank is proud to be a homegrown bank that fully complies with RBI’s guidelines on data localization. All bank records are in India,” the company said. The RBI is yet to comment.
On Friday, the Reserve Bank had told Paytm to stop enrolling new customers and ordered an audit of its IT systems, citing “certain material oversight issues observed at the bank”.
RBI had said it will allow Paytm Bank to onboard new customers with specific approval after reviewing the IT auditor’s report.
Paytm shares fell after the RBI move. Shares of the company also collapsed over the weekend when it was revealed that Paytm founder and Chief Executive Vijay Shekhar Sharma had been detained for a short time after he allegedly rammed into a police officer’s car and fled.
Mr. Sharma owns 51 percent of Paytm Payments Bank, while Paytm parent One97 Communications owns the rest.
Paytm characterized the accident as a “minor offense”. Shares of the company fell more than 13 percent Monday.
Paytm made its debut last November in the largest IPO ever (IPO).
Including Monday’s losses, Paytm shares are down more than 68 percent to Rs 680.40 from the issue price of Rs 2,150.
Paytm Payments Bank had received central bank approval in December 2021 to act as a scheduled payment bank, allowing it to expand its financial services.