The Delhi High Court has issued notice in a plea challenging the operation of PayTm Payments Bank’s Post-Paid Wallet facility..Notice was issued to the Reserve Bank of India and PayTm Payments Bank by a Division Bench headed by Chief Justice Rajendra Menon in a petition moved by Abhijit Mishra..The Petition filed through advocate Payal Bahl claims that the operation of PayTm Payments Bank’s Post-Paid Wallet is illegal and contrary to the banking laws and regulations..The Petitioner has submitted that PayTm Payments Bank Limited was granted Payments Bank license in terms of Section 22 of the Banking Regulation Act, 1949 by the RBI in January 2017. The RBI Guidelines for Licensing of Payments Banks, however, did not allow credit or loan disbursement activities or products as authorized activities for a payments bank, it is contended. The Petitioner thus alleges that PayTM Payments Bank’s conduct is in violation of Section 1.6 of RBI’s Operating Guidelines for Payments Bank which puts restrictions on loans and advances..In spite of the restriction, PayTM Payments Bank Limited has been lending to the customers through its PayTM Post Paid Wallet, in clear violation of the guidelines..It is further stated that as per an RTI response to the Petitioner’s query, the RBI has stated that the PayTM Payments Bank Limited has not informed or notified the banking regulator about its operations of the Post Paid Wallet..The Petitioner thus contends that since the RBI was not informed about the design, functioning, or other features of the PayTM Post Paid wallet product as introduced by the PayTM Payments Bank, its operation is also in violation of Section 1.8 of the RBI’s Operating Guidelines for Payments Bank..Additionally, the Petitioner has also claimed that the Post Credit facility is in violation of Right to Privacy under Article 21 of the Constitution as the postpaid facility was being provided by a third party, Clix Finance India Private Limited and customer’s personal information was being shared “deceitfully” with it..PayTm Payments Bank through the Post-Paid Wallet is aiding and abetting a deceitful conspiracy with intent to defraud the customers of the bank by high-interest rate loans from the third party which is not authorized by the Reserve Bank of India to act or participate in the business/activities or affairs of the PayTM Payments Bank, the Petition states..It has been further contended that PayTM Payments Bank has been operating the PayTM Post Paid wallet in contravention of the terms and conditions of the Banking License under Section 22 of the Banking Regulations Act and Section 26 and 27 of the Payments and Settlements Act. Apart from seeking a direction to the RBI to take appropriate punitive actions against the PayTM Payments Bank Limited, the Petitioner also seeks a declaration absolving all the customers who are in default of their debt of the credit payments to the PayTM Post Paid wallet..It also seeks to transfer all the profits earned from the PayTM Post Paid Wallet operation to the Prime Minister’s Relief Fund for the welfare of the nation.
The Delhi High Court has issued notice in a plea challenging the operation of PayTm Payments Bank’s Post-Paid Wallet facility..Notice was issued to the Reserve Bank of India and PayTm Payments Bank by a Division Bench headed by Chief Justice Rajendra Menon in a petition moved by Abhijit Mishra..The Petition filed through advocate Payal Bahl claims that the operation of PayTm Payments Bank’s Post-Paid Wallet is illegal and contrary to the banking laws and regulations..The Petitioner has submitted that PayTm Payments Bank Limited was granted Payments Bank license in terms of Section 22 of the Banking Regulation Act, 1949 by the RBI in January 2017. The RBI Guidelines for Licensing of Payments Banks, however, did not allow credit or loan disbursement activities or products as authorized activities for a payments bank, it is contended. The Petitioner thus alleges that PayTM Payments Bank’s conduct is in violation of Section 1.6 of RBI’s Operating Guidelines for Payments Bank which puts restrictions on loans and advances..In spite of the restriction, PayTM Payments Bank Limited has been lending to the customers through its PayTM Post Paid Wallet, in clear violation of the guidelines..It is further stated that as per an RTI response to the Petitioner’s query, the RBI has stated that the PayTM Payments Bank Limited has not informed or notified the banking regulator about its operations of the Post Paid Wallet..The Petitioner thus contends that since the RBI was not informed about the design, functioning, or other features of the PayTM Post Paid wallet product as introduced by the PayTM Payments Bank, its operation is also in violation of Section 1.8 of the RBI’s Operating Guidelines for Payments Bank..Additionally, the Petitioner has also claimed that the Post Credit facility is in violation of Right to Privacy under Article 21 of the Constitution as the postpaid facility was being provided by a third party, Clix Finance India Private Limited and customer’s personal information was being shared “deceitfully” with it..PayTm Payments Bank through the Post-Paid Wallet is aiding and abetting a deceitful conspiracy with intent to defraud the customers of the bank by high-interest rate loans from the third party which is not authorized by the Reserve Bank of India to act or participate in the business/activities or affairs of the PayTM Payments Bank, the Petition states..It has been further contended that PayTM Payments Bank has been operating the PayTM Post Paid wallet in contravention of the terms and conditions of the Banking License under Section 22 of the Banking Regulations Act and Section 26 and 27 of the Payments and Settlements Act. Apart from seeking a direction to the RBI to take appropriate punitive actions against the PayTM Payments Bank Limited, the Petitioner also seeks a declaration absolving all the customers who are in default of their debt of the credit payments to the PayTM Post Paid wallet..It also seeks to transfer all the profits earned from the PayTM Post Paid Wallet operation to the Prime Minister’s Relief Fund for the welfare of the nation.
