Paytm Payments Bank on Monday rejected a media report which claimed that the Reserve Bank of India's (RBI's) direction to the bank to stop onboarding new customers on its platform came because the bank was found to be sharing data with Chinese firms.
In a tweet, Paytm Payments Bank called the report "false and sensationalist".
"Paytm Payments Bank is proud to be a completely homegrown bank, fully compliant with RBI's directions on data localisation. All of the Bank's data resides within India," it said.
Earlier today, Bloomberg, citing a person familiar with the matter, reported that the annual inspection by the central bank had found that Paytm Payments Bank's servers were sharing information with China-based firms which indirectly own a stake in the bank.
Based on certain material supervisory concerns observed in the bank, the RBI had on Friday asked fintech company Paytm's associate Paytm Payments Bank to stop onboarding new customers with immediate effect. The bank was also directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system.
Paytm, in a statement on Saturday, said that RBI's action does not impact any existing customers of Paytm Payments Bank, who can continue to use all banking and payment services without interruption.
"The bank is taking immediate steps to comply with RBI directions, including appointment of a reputed external auditor to conduct a comprehensive system audit of its IT systems. Paytm Payments Bank remains committed to working with the regulator to address their concerns as quickly as possible," Paytm said
It said the central bank's direction will not have any impact on the services that Paytm provides in partnership with other financial services institutions.
"Users can not, until further notice, sign up for new Paytm Payments Bank wallets or savings or current accounts. Paytm believes that the measures imposed upon Paytm Payments Bank will not materially impact Paytm's overall business," it added.
Meanwhile, the shares of One 97 Communications Ltd, the parent company of Paytm, plunged 12.84 per cent to Rs 675.35 on the BSE on Monday following RBI's action.