RBI letter to Paytm Bank does not talk about data access: Vijay Shekhar Sharma

RBI has clearly articulated a list of tasks that Paytm Payments Bank has to complete and get the audit done, Vijay Shekhar Sharma said

After Paytm Payments Bank denied reports of data leaks to Chinese-based entities, Paytm’s co-founder and chief executive Vijay Shekhar Sharma jumped in to say the Reserve Bank of India (RBI) has not mentioned anything about data access, but only asked the company to carry out an audit from a third party.

“RBI has clearly articulated a list of tasks that Paytm Bank has to complete and get the audit done. I also want to confirm that none of the obligations mentioned in the letter of observation carries any reference of data access or unauthorised data access or authorised access or data access or data localisation or data system or servers related to any foreign shareholder access or foreign access,” Sharma said.

When asked about RBI’s direction on the appointment of an IT audit firm, Sharma said, “These are related to IT process systems where they need confirmation and they said instead of self-submission you can get it audited by someone because RBI does that as a process.”

“Even today or in the past, there has never been any request from any foreign shareholder of Paytm Payments Banks. Never has been in the past nor it is today. Paytm Bank is a proud data localised firm since its inception.. where no server is kept outside or any outside person has any access to any data or whatsoever,” Sharma said.

In a statement late Friday, the RBI had barred the Paytm Payments Bank form onboarding new customers and also called for an IT audit. The action by the RBI is based on certain “material supervisory concerns” and the restrictions will continue pending a comprehensive audit of its information-technology systems.

In reply, Paytm Payments Bank said it is taking all the steps to comply with the RBI orders. “Dear customers, we value your relationship with us. We are taking all steps to comply with the RBI directions. Our existing customers can continue to seamlessly use all our banking services.”

Shares of Paytm plunged as much as 13.3% in trade today to hit a fresh all-time low before marginally recovering to close 12.21% lower at 680.40 apiece on NSE.

However, during the day, fresh reports emerged that the RBI action was based on data leaks to Chinese firms which own stake in the parent company Paytm.

A report by Bloomberg claimed Paytm Payments Bank was barred from taking on new customers because it violated rules by allowing data to flow to servers abroad and didn’t properly verify its customers. Annual inspections by the Reserve Bank of India found that the company’s servers were sharing information with China-based entities that indirectly own a stake in Paytm Payments Bank, the report said, citing sources.

Paytm Payments data denied reports that leak to Chinese firms as 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.

The Bank is taking immediate steps regarding the RBI’s decision. We remain committed to working with the regulator to address their concerns as quickly as possible. PPBL’s existing customers can continue to enjoy the benefits of seamless banking and digital payments services without interruption, Paytm said in a statement.

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