Following an order from the RBI, Paytm Payments Bank is required to discontinue the acceptance of fresh deposits in its accounts or popular wallets starting from February 29, 2024.
New Delhi: Paytm Payments Bank has been directed by the Reserve Bank of India (RBI) to cease accepting fresh deposits in its accounts or popular wallets after February 29, 2024. The regulator informed Paytm Payments Bank, which is a subsidiary of Paytm, one of India’s largest payment firms, that it will no longer be able to accept new deposits, facilitate credit transactions, or provide fund transfers, including Unified Payments Interface (UPI) services, after the specified date.
According to Yogesh Dayal, a chief general manager at the central bank, “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.” The statement also mentioned that customers will be able to withdraw or utilize their balances from their accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc., without any restrictions, up to the available balance.
What is the reason behind the imposition of restrictions on Paytm Payments Bank by the RBI?
In March 2022, the Paytm Payments Bank was instructed by the RBI to cease acquiring new customers, as stated by the central bank. Nevertheless, the RBI stated that a thorough audit conducted by external auditors uncovered ongoing non-compliance issues and significant supervisory concerns within the bank. The RBI did not disclose specific details regarding these concerns. The central bank further mentioned that the action taken against Paytm Payments Bank was in accordance with Section 35A of the Banking Regulation Act, 1949.
Paytm Payments Bank Said On RBI Restrictions?
Paytm Payments Bank, a subsidiary of One 97 Communications Limited (OCL), has announced that it is swiftly implementing measures to adhere to the directives issued by the Reserve Bank of India (RBI).
In a statement released on Thursday, the fintech company clarified that OCL, being a payments firm, collaborates with multiple banks, not limited to Paytm Payments Bank, to offer a range of payment solutions.
The statement conveyed that there will be an acceleration in the plans and a complete transition to different bank partners. OCL will exclusively collaborate with other banks and discontinue its association with Paytm Payments Bank Limited. Moving forward, OCL’s focus will be on expanding its payments and financial services business through strategic partnerships with other banks.
RBI Action Expected to Cause Paytm a Loss of More Than ₹ 500 Crore.
Paytm has stated that it anticipates an adverse effect of ₹ 300 crore to ₹ 500 crore on its yearly earnings due to the Reserve Bank of India’s directive, which prohibits Paytm Payments Bank from accepting new deposits.