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HomeIndiaBankers, other likely buyers of Paytm Payments bank want to redo KYC...

Bankers, other likely buyers of Paytm Payments bank want to redo KYC of all merchants, vendors

A number of bankers and different gamers who need to purchase Paytm’s troubled Funds Financial institution division need all of the KYC formalities and documentation of all on-boarded retailers and distributors who use the platform redone, earlier than they proceed with any takeover

A number of banks are eyeing the funds enterprise of Paytm Funds Financial institution, however they continue to be cautious on account of issues over the supply of funds in its nodal accounts. These banks might insist on conducting contemporary KYC (know your buyer) checks on the service provider base earlier than continuing with any takeover, as reported by the Financial Occasions.

Bankers highlighted worries about fraudulent retailers having access to their techniques in the course of the transition course of. A senior government from one of many banks emphasised the necessity for cautious navigation, acknowledging the numerous enterprise alternative but in addition emphasizing the related dangers.

The Reserve Financial institution of India (RBI) had directed Paytm to halt accepting deposits and credit score transactions publish February 29, citing lapses round KYC guidelines and cash laundering tips. Whereas contemporary KYC is a normal requirement, it might pose challenges within the occasion of a hurried switch earlier than the deadline, as extra formalities might take extra time.

Potential suitors for Paytm’s enterprise embrace HDFC Financial institution, Axis Financial institution, and Sure Financial institution. Nonetheless, queries despatched to those banks remained unanswered as of Wednesday’s press time.

Earlier, it was reported that Paytm’s founder Vijay Shekhar Sharma had met RBI officers to hunt an extension of the February 29 deadline, though sources recommend that the regulator is unlikely to grant any extension.

Banks are reportedly cautious earlier than looking for clearance from the regulator, contemplating the seriousness of the lapses in KYC. Moreover, the Directorate of Enforcement (ED) is predicted to launch a proper probe into Paytm concerning points flagged by the RBI.

Throughout a current analyst name, Paytm’s chief working officer outlined two choices for the enterprise switch, with banks more likely to go for contemporary onboarding of retailers, involving an in depth KYC course of.

Regardless of the uncertainties, retailers onboarded by Paytm’s associate banks since 2022 are anticipated to proceed accepting funds seamlessly. Paytm Funds Financial institution has been underneath an embargo since March 2022, throughout which era it has been including retailers solely for its associate banks.

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