RBI restricts Paytm payments bank from accepting deposits after February 29
the Reserve Bank of India (RBI) has imposed stringent restrictions on Paytm Payments Bank Ltd (PPBL)
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In a significant development on January 31, the Reserve Bank of India (RBI) has imposed stringent restrictions on Paytm Payments Bank Ltd (PPBL) following a thorough system audit and compliance validation by external auditors. The regulatory action, initiated under section 35A of the Banking Regulation Act, 1949, restricts PPBL from accepting deposits or top-ups in any customer account, wallets, or FASTags after February 29.
The audit reports conducted by external entities revealed persistent non-compliance and continued material supervisory concerns within the bank, prompting the RBI to take further supervisory action. As a result, PPBL will be barred from facilitating deposits, credit transactions, or top-ups in various financial instruments, including prepaid instruments, wallets, FASTags, NCMC cards, and more after the specified date.
The RBI clarified that no other banking services, such as fund transfers, BBPOU, and UPI facilities, will be provided by PPBL after February 29, 2024. Additionally, the Nodal Accounts of One97 Communications and Paytm Payments Services Ltd. are instructed to be terminated promptly, no later than February 29, 2024.
However, customers of PPBL will still be allowed to withdraw or utilize balances from their accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, and National Common Mobility Cards, without any restrictions up to their available balance.
The central bank emphasized that the settlement of all pipeline transactions and nodal accounts, initiated on or before February 29, 2024, should be completed by March 15, 2024. Subsequently, no further transactions will be permitted.
This regulatory intervention follows a previous directive in March 2022, where the RBI had instructed PPBL to halt the onboarding of new customers immediately.
Commenting on the development, Gaurav Goel, Director of Fynocrat Technologies, expressed concerns about the operational integrity of Paytm Payments Bank. He highlighted the potential impact on Paytm's banking operations and suggested that the move by the RBI could influence the short to medium-term stock price of Paytm's parent company, One 97 Communication. Official statements from Paytm are awaited to provide further clarity on the situation.
