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Paytm Payments Bank denied reports that RBI action — barring it from onboarding new customers — was due to data leaks to Chinese firms as false and sensationalist.
"A recent Bloomberg report claiming data leak to Chinese firms is false and sensationalist," Paytm Payments Bank said.
"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 Bloomberg report claimed that 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 Bank is a joint venture between Paytm and its founder Vijay Shekhar Sharma. China’s Alibaba Group Holding Ltd. and its affiliate, Jack Ma’s Ant Group Co., own shares of Paytm, according to exchange filings.
In a statement late Friday, the RBI had cited “material supervisory concerns" for its action, without elaborating. Shares of Paytm, formally known as One 97 Communications Ltd., tumbled as much as 13.3% Monday.
While the RBI had similarly punished companies including American Express Banking Corp. and Mastercard Inc. for flouting data-storage rules, the concerns around Paytm Payments Bank are particularly sensitive given India’s hostile political relationship with China.
Paytm Payments Bank has earlier 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."
Paytm Bank started operations in 2017 to help Paytm customers without access to the formal banking sector open bank accounts after getting its licence in 2015. In December, it received RBI’s approval to function as a scheduled payments bank.
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