The Reserve Bank of India (RBI) on Wednesday ordered Paytm Payments Bank to stop accepting fresh deposits in its accounts or popular wallets after February 29, 2024.
Paytm Payments Bank, which is part of one of India’s largest payment firms Paytm, was told by the regulator that it will not be able to take fresh deposits, facilitate credit transactions, or offer fund transfers, including Unified Payments Interface (UPI) facility after February 29.
“No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime,” Yogesh Dayal, a chief general manager with the central bank, said in a press statement.
Withdrawal or utilisation of balances by its customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, up to their available balance, the statement added.
The RBI said it had in March 2022 asked the Paytm Payments Bank to stop adding new customers.
However, a Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action, the RBI said, without disclosing details.
The action against Paytm Payments Bank was taken under Section 35A of the Banking Regulation Act, 1949, the central bank added.
What The Paytm Payments Bank Had To Say About RBI Limitations:-
An affiliate of One 97 Communications Limited (OCL), Paytm Payments Bank, declared that it is following the RBI’s instructions with “immediate steps”.
The fintech company stated in a statement on Thursday that OCL, as a payments company, collaborates with multiple banks (not just Paytm Payments Bank) on a range of payment products.
We will now expedite the plans and switch over entirely to other bank partners. OCL will not be collaborating with Paytm Payments Bank Limited going ahead; instead, it will only deal with other banks. The statement stated that OCL’s next step will be to carry on growing its financial services and payments business—but only in collaboration with other banks,
Owing To RBI Action, Paytm Is Likely To Lose More Than ₹ 500 Crore
