It is known that a few days back, RBI barred Paytm Payment Bank from accepting public funds after February 29. There were many speculations behind RBI's actions.
Some sections on social media mentioned that Paytm had tied up with a Chinese company, leading to this stern action taken as a part of national security.
However, upon probing, it is almost believable that the recent elections held in some states of the nation are the reason behind RBI's latest decision on Paytm Payments Bank.
Paytm is not only a mobile app for transferring funds from person to person but also a bank of its own. It opens accounts, accepts deposits as well.
For any account to be opened in a bank, the basic prerequisite is the PAN card. It is said that more than 1000 accounts were opened with some PAN numbers in Paytm Payments Bank, which was tracked and nailed by the RBI eventually.
The widespread opening of accounts is thought to have occurred during the recent elections. Many voters received amounts from contesting candidates through Paytm this time rather than the flow of physical cash.
The middlemen who distributed money also extensively used the online payment module. As mainstream banks have strict rules regarding opening accounts with stern KYC norms, the candidates and middlemen have chosen the Paytm route for opening a number of instant accounts with the same PAN number to facilitate the mission of bribing voters.
Finally, RBI found something fishy and banned Paytm bank from conducting banking operations from February 29 onwards.
