Paytm Payments Bank Accused Of Moving Data To China; Founder Responds

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Paytm is one of the biggest players in the digital payments segment in India. However, not everything is going well for the platform. The Reserve Bank of India released a statement asking Paytm Payments Bank to immediately stop onboarding new members because of "certain material supervisory concerns observed in the bank". A report suggests Paytm was allowing the flow of user data through Chinese servers.

 
Paytm Payments Bank Accused Of Moving Data To China

Paytm Payments Bank Data In Chinese Servers?

A report by Bloomberg states the RBI banned new customers from Paytm as it was allegedly allowing user data to pass through Chinese servers. Plus, Paytm is allegedly not verifying the customers as required by regulations.

"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 by Paytm Payments Bank Ltd will be subject to specific permission to be granted by RBI after reviewing the report of the IT auditors," the RBI statement said.

Since there was no proper regulation with Paytm Payments Bank, there was a rise in fraudulent money laundering, which was further damaging the country's economy. The report further states that Paytm violated India's rules by allowing data to pass through Chinese servers, which indirectly owned a stake in Paytm Payments Bank.

Paytm Responds To Allegations

Paytm, founder, Vijay Shekhar Sharma said the allegations were false and that Paytm Payments Bank was compliant with the RBI rules of data storage and servers. In a statement to a national TV channel, Sharma said that Paytm Payments Bank "absolutely does not contain any point that mentions any data access, or server or data access through whatsoever [means.] Or server being outside of India."

He further stated that the concerns raised by the RBI are related to the payment bank's IT. Sharma has assured stockholders that the RBI wants a third-party audit of the Paytm Payments Bank, whose report will be delivered to the National Bank. However, the shares of Paytm have witnessed a sharp dip since the report surfaced online.

 

Paytm Payments Bank has come a long way from being just a platform for transferring money. Founder Sharma aims to make Paytm into a small finance bank. But it seems to be facing roadblocks in India, especially with its data.

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