Effective January 31, the Reserve Bank of India (RBI) has imposed significant business restrictions on Paytm Payments Bank. This includes a ban on accepting new deposits and making credit transactions after February 29. Moreover, on March 11, the RBI extended the restrictions by banning Paytm Payments Bank from accepting new customers.
Paytm Payments Bank will not be able to accept further deposits into any customer account after February 29, RBI said.
He added that no credit transactions will be allowed either, not even through wallets.
Withdrawal or use of balances by its customers will be allowed without restrictions, the central bank said.
Supervisory concerns and disagreements
The RBI’s action was prompted by a comprehensive system audit report, followed by a compliance verification report from external auditors.
These reports highlighted persistent non-compliance and ongoing supervisory concerns at the bank. The severity of these problems required additional control measures.
Effective February 29, 2024, Paytm Payments Bank is restricted from accepting further deposits, making credit transactions or enabling recharges on customer accounts, prepaid instruments, wallets, FASTag and NCMC cards.
However, interest, cashbacks or refunds that may be credited at any time are taken into account. Withdrawal or use of balances by customers in various accounts and instruments remains permissible without limitation up to their usable balance.
After February 29, 2024, the bank is prohibited from offering any banking services, with the exception of withdrawals and balance withdrawals. This includes fund transfers involving services such as AEPS, IMPS, BBPOU and UPI facilities.
The RBI ordered the immediate termination of Nodal accounts linked to One97 Communications Ltd and Paytm Payments Services Ltd. This directive is to be implemented swiftly with a deadline of 29 February 2024 at the latest.
