‘False and sensationalist’: Paytm on report it leaked data to Chinese firms

Paytm on Monday described as ‘false and sensationalist’ a Bloomberg report which stated that the recent action taken by the Reserve Bank of India (RBI) against Paytm Payments Bank was due to the company allowing its servers to ‘flow abroad,’ in this case China, in what was a violation of rules.

“A recent Bloomberg report claiming data leak to Chinese firms is false and sensationalist. Paytm Payments Bank is proud to be a completely homegrown bank, fully compliant with RBI’s directions on data localisation. All of the Bank’s data resides within India,” Paytm Payments Bank said in a Twitter post.

Last Friday, the RBI issued an official order, barring Paytm Payments Bank from onboarding new customers ‘with immediate effect,’ because of ‘material supervisory concerns’ observed in the bank.

“Onboarding of new customers will be subject to specific permission to be granted by the RBI after reviewing the report of IT auditors, to be appointed by Paytm to conduct a comprehensive system audit of its IT system,” the central bank’s order read.

Following up on this development, Bloomberg, citing people ‘who did not wish to be identified,’ reported that the action was taken because the RBI discovered that the company’s servers were sharing information with China-based entities that own stakes in Paytm Payments Bank.

Paytm was founded by Vijay Shekhar Sharma in 2010 and was formerly known as One 97 Communications Limited. Paytm Payments Bank, meanwhile, was incorporated in 2016 and commenced operations in 2017. Sharma owns a 51 per cent in the latter. China’s Alibaba Group Holding Ltd. and its affiliate, Jack Ma’s Ant Group Co., own shares in Paytm, according to exchange filings.