The Reserve Bank of India has ordered Paytm Payments Bank to stop onboarding new customers and to appoint an IT audit firm, citing "supervisory concerns".
In a brief statement, the RBI says Paytm Payments Bank must stop accepting new customers immediately and hire a firm to audit its IT system.
After reviewing a report from the auditors, the central bank will decide on granting permission for customer onboarding to resume.
"This action is based on certain material supervisory concerns observed in the bank," says the statement.
Paytm Payments Bank - 51% owned by Paytm founder Vijay Shekhar Sharma - was only granted approval by the RBI to operate as a scheduled payments bank in December, a move that enabled it to offer a wider range of services.