(Bloomberg) — The Reserve Bank of India barred Paytm Payments Bank, founded by One 97 Communications Ltd’s. Vijay Shekhar Sharma, from accepting new customers, pending a comprehensive audit of its information-technology systems.

Most Read from Bloomberg

  • Elon Musk Challenges Vladimir Putin to ‘Single Combat’ for Ukraine

  • Ukraine Update: China Seeks to Avoid U.S. Sanctions Over War

  • Putin’s State Media News Is Interrupted: ‘They’re Lying to You’

  • Panic Selling Grips Chinese Stocks in Biggest Plunge Since 2008

  • Pregnant Woman Pictured Being Evacuated From Bombed Maternity Ward Has Died

“This action is based on certain material supervisory concerns observed in the bank,” the central bank, which is also the regulator of the nation’s banking sector, said in a statement on Friday.

The company is taking steps to comply with the RBI’s directive, including the appointment of an external auditor, it said in a statement on Saturday. Existing customers will be unaffected.

Paytm Payments Bank started its operation in November 2017 after getting its license in 2015. Sharma spearheads the bank’s strategy and vision, according to its website, and has played a vital role in the evolution of mobile payments in India.

The Payments Bank processes the transactions for Paytm unlike other payment players who do not have a bank in the group, said Anand Dama, an analyst at Emkay Global Financial Services Ltd. As of now, the RBI has not put any embargo on the processing business of Paytm Bank which is a key revenue driver, he said.

Still, this will be sentimentally negative for Paytm which has seen sharp correction since its initial share sale, Dama said.

One 97 Communications Ltd. raised $2.5 billion in its IPO but a 27% plunge in its Nov. 18 debut made it one of the worst initial showings by a major technology firm since the dot-com bubble era of the late 1990s. The stock is now down nearly 64% from its issue price of 2,150 rupees.

(Adds comment from company in third paragraph)

Story continues

Most Read from Bloomberg Businessweek

  • The 18 Minutes of Trading Chaos That Broke the Nickel Market

  • ADHD Drugs Are Convenient To Get Online. Maybe Too Convenient

  • Peloton Got Trapped in Its Trillion-Dollar Fantasy

  • Min Jin Lee’s Quest to Make Us Pay Attention to Anti-Asian Hate

  • A Visual Guide to the World’s Military Budgets

©2022 Bloomberg L.P.

(305) 707 0888
FREE water test Quick estimate