Edited by Deepali Verma
The Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank Ltd (PPBL) on January 31, after a system audit report and a subsequent compliance validation report of external auditors.
PPBL is prohibited from accepting deposits or top-ups in any customer account, wallets or FASTags after February 29 under section 35A of the Banking Regulation Act, 1949.
The audit reports have pointed out persistent non-compliance and continued material supervisory concerns in the bank, that warrants further supervisory action, said the RBI statement.
“No additional deposits or credit transactions or top-ups shall be permitted in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, except any interest, cashbacks, or refunds which may be credited anytime,” it said.
“No other banking services like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after February 29, 2024,” the statement added.
Further mentioning, the RBI said that the Nodal Accounts of One97 Communications and Paytm Payments Services Ltd. are to be terminated at the latest, in any case not going beyond February 29, 2024.
The withdrawal or utilisation of balances by its customers from their accounts such as savings bank accounts, current accounts, prepaid instruments, FASTags and National Common Mobility Cards are to be allowed without any barr, up to their available balance, informed the banking regulator in a statement.
“The settlement of all pipeline transactions as well as nodal accounts (in respect of all transactions initiated on or before February 29, 2024) shall be done by March 15, 2024, and no further transactions shall be allowed thereafter,” the central bank stated.
In the beginning of March 2022, the RBI had directed PPBL to stop bringing in new customers with immediate effect.
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Fynocrat Technologies’ Director Gaurav Goel while commenting on the development, said, “As of February 29, the Reserve Bank of India (RBI) has undertaken measures against Paytm Payments Bank Limited (PPBL), that restricts its ability to hold deposits or top-ups in customer accounts such as wallets and FASTags. The central bank has marked the ongoing non-compliance and supervisory concerns, prompting apprehensions dealing with the operational integrity of Paytm Payments Bank.”
“The RBI’s move is targeting Paytm’s banking operations, which allows customers to still utilise Paytm for digital payments as long as their account remains linked to an external bank. This development is further expected to influence the short to medium-term stock price of Paytm (One 97 Communication),” he added.
