RBI Cracks Down on Paytm Amidst Growing Concerns of Financial Fraud

In a significant move aimed at preventing potential fraud in the financial sector, the Reserve Bank of India (RBI) has taken action against Paytm, signaling a broader crackdown. Last month, the RBI suspended most activities of Paytm’s banking affiliate due to alleged lapses in customer verification.

Experts say this crackdown shows how authorities are becoming more vigilant as regulatory concerns intensify. The RBI is increasingly focusing on ensuring proper customer verification, imposing fines on banks and fintech firms for lapses in this regard.

The RBI can fine up to Rs 5 crore for violations, and fines have surged this fiscal year, indicating a stricter stance on compliance. Recent actions include ordering Visa to stop a payments service and suspending Paytm Payments Bank from accepting fresh credits.

In 2023, the RBI imposed a combined penalty of Rs 10.34 crore on three banks for failing to comply with its directives. Last November, Axis Bank faced a penalty of ₹90.92 lakh for non-compliance with RBI guidelines.

Despite increased spending on technology to prevent fraud, reported cases have risen significantly. Paytm’s case has drawn attention, with the RBI barring its banking affiliate from accepting fresh credits. The deadline was extended, and Paytm is in talks with other banks to address outstanding payments.

This crackdown highlights the challenges of compliance and accountability in the financial system. The RBI’s actions underscore the importance of following rules and regulations in the sector.