The Reserve Bank of India (RBI) said on Friday it would allow Paytm payments bank to take on new customers subject to specific permission after reviewing the IT auditor's report. The latter had received the central bank's approval in December 2021 to function as a scheduled payments bank, helping it expand its financial operations.
Analysts at ICICI Securities said the digital payments startup would have to increase its efforts to enhance engagement with the existing user base to offset any adverse impact of the embargo on new users. Macquarie Research said it expects a significant impact on Paytm's brand and customer loyalty. They said the recent developments would lower the chance of Paytm Payments Bank of upgrading to a small finance bank.
Business news website Moneycontrol had reported that Paytm Payments Bank was likely to apply to the RBI for a small finance bank licence by June 2022, when it completes 5 years of operations.
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