Report claiming data leak to Chinese firms is false and sensationalist: Paytm Payments Bank

“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,” the company said in a tweet.

Bloomberg, earlier in the day, reported Paytm Payments Bank was barred from taking on new customers because it violated rules by allowing data to flow to servers abroad and didn’t properly verify its customers.

The news agency citing a source said annual inspections by the Reserve Bank of India found that the company’s servers were sharing information with China-based entities that indirectly own a stake in Paytm Payments Bank.

Paytm Payments Bank is a joint venture between Paytm and its founder Vijay Shekhar Sharma. China’s Alibaba Group Holding and its affiliate, Jack Ma’s Ant Group, own shares of Paytm, according to exchange filings.

The Bloomberg reports further claimed, citing the source, that Paytm Payments Bank had also onboarded thousands of clients without adequate know-your-customer documentation and the concern was that some of these could have been mules for money laundering.

In Monday’s trading, shares of Paytm plunged to their all-time lows, breaching even the most bearish targets on the stock. It settled the day at Rs 675.35, down 13 per cent over the previous day.