Paytm Payments Bank denies report claiming it leaked data to Chinese firms

• The Reserve Bank of India barred Paytm Payments Bank from taking on new customers last week.
• A spokesperson of One 97 Communications, the parent entity of digital payments giant Paytm, has denied the allegations.
• Paytm Payments Bank is a joint venture between Paytm and its founder Vijay Shekhar Sharma.

The Reserve Bank of India barred Paytm Payments Bank from taking on new customers last week because it allowed its data to flow to servers that were sharing information with China-based entities, Bloomberg reported on Monday.

“Annual inspections by the Reserve Bank of India [RBI] found that the company’s servers were sharing information with China-based entities that indirectly own a stake in Paytm Payments Bank,” the report noted citing sources.

A spokesperson of One 97 Communications, the parent entity of digital payments giant Paytm, has denied the allegations. The spokesperson has claimed that the report is “completely false” and “simple [sic] sensationalising”.

“Paytm Payments Bank is proud to be a completely homegrown bank and is fully compliant with RBI’s directions on data localisation. All of the Bank’s data resides within the country. We are true believers of the Digital India initiative, and remain committed to driving financial inclusion in the country,” the spokesperson added.

Paytm Payments Bank is a joint venture between Paytm and its founder Vijay Shekhar Sharma. It is important to note that Paytm Payments Bank is not included under the public offering of One 97 Communications, instead it is an associate entity. Paytm Payments Bank is the backbone behind several Paytm offerings including insurance, digital payments and lending.

The company’s shares dipped over 12% on Monday, reaching an all time low of ₹680. The company is currently sitting on a market cap of ₹43,798 crore ($5.7 billion), which is nearly four times less than the $19.9 billion market cap the company was accorded during its initial public offering (IPO).

The central bank had banned Paytm from onboarding new customers after noticing certain “material supervisory concerns”. RBI has directed Paytm Payments Bank to appoint an information technology (IT) audit firm to conduct a comprehensive system audit of its IT system.

It is important to note that Global investment bank Macquarie had slashed Paytm’s target price to ₹700, from previous ₹1,200 in November 2021 and ₹900 in January 2022, in February this year.

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