Paytm forms advisory committee under former Sebi chief Damodaran

Paytm forms advisory panel to enforce compliance

The board of One97 Communications Ltd, the company that runs the Paytm payments app, has formed a panel headed by N. Damodaran, a former chairman of India’s markets regulator, to advise Paytm Payments Bank Ltd on compliance and regulation a day after the banking regulator criticised the lender for repeated non-compliance of rules.

The committee, led by Damodaran and comprising two other members, will work with the board of One97 Communications to strengthen compliance and regulatory matters, the company told the exchanges.

The committee includes M.M. Chitale, a former president of the Institute of Chartered Accountants of India (ICAI) and a former governing Council Member of the Banking Codes and Standards Board of India, along with banker R. Ramachandran, a former Chairman and Managing Director of Andhra Bank, One97 Communications said.

On January 31, the RBI imposed major business restrictions on Paytm Payments Bank, citing prolonged non-compliance to prudential regulations.

The decision to form the panel came a day after the RBI criticised the payments bank operations for repeated non-compliance to prudential regulations, including know-your-customer norms (KYC) norms and anti-money laundering rules.

In its statement, One97 Communications said the company’s management is committed to driving sustainable business growth while adhering to a regulatory and compliance framework.

Also read: Paytm could build profitable business model with customer data, says Alchemy Capital CIO

The charges against Paytm

During its probe, the regulator found major violations in KYC norms, which exposed customers, depositors, and wallet holders to serious risks. In its probe, the RBI found that in thousands of cases, the same PAN was linked to more than 100 customers, and in some cases, the number shot past 1,000.

Also, the RBI found an unusually high number of dormant accounts, which could have been used as mule accounts. There are also concerns relating to money laundering arising from deficiencies in the KYC processes and the lack of a transaction monitoring system in the bank.