In a significant setback for Paytm Payments Bank Limited, the Reserve Bank of India (RBI) has ordered the bank to cease accepting deposits or top-ups in customer accounts, wallets, FASTags, and other prepaid instruments after February 29, 2024. This decision comes after the RBI’s earlier directive in March 2022, instructing Paytm Payments Bank to halt the onboarding of new customers.
The central bank’s action follows a Comprehensive System Audit report and subsequent compliance validation, revealing persistent non-compliances and ongoing supervisory concerns within the bank. The RBI, invoking Section 35A of the Banking Regulation Act, 1949, has taken supervisory measures against Paytm Payments Bank.
Existing customers of the bank, however, are assured that they can withdraw or utilize their available balance from various accounts, including savings and current accounts, prepaid instruments, FASTags, and National Common Mobility Cards. The RBI has directed the bank to settle all pipeline transactions and nodal accounts initiated on or before February 29, 2024, by March 15, 2024, with no further transactions permitted thereafter.
Despite these restrictions, Paytm Payments Bank customers will still be able to access their available balances and use the funds for various purposes. However, the bank will not provide additional services like fund transfers, Bharat Bill Payment Operating Unit (BBPOU), and Unified Payments Interface (UPI) facility after February 29, 2024.
In response to the RBI’s directive, Paytm Payments Bank, an associate of One 97 Communications Limited (OCL), announced that it is taking immediate steps to comply with the regulatory measures. OCL clarified that, as a payments company, it collaborates with various banks beyond Paytm Payments Bank. In light of the situation, OCL revealed plans to accelerate its transition to other bank partners and emphasized its commitment to expanding payments and financial services business solely through partnerships with other banks in the future.
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