Paytm Payments Bank was forbidden by the Reserve Bank of India on Wednesday from receiving deposits or top-ups in any user account, prepaid instrument, wallet, or FASTags after February 29, 2024.
Paytm Payments Bank has already been prohibited from onboarding new users by the RBI from March 11, 2022.
External auditors provided a detailed system audit report and a subsequent compliance validation report, prompting the central bank’s action against Paytm.
What does RBI says?
“The Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action,” the Reserve Bank of India (RBI) said in a statement.
It went on to say: “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, cashback, or refunds which may be credited anytime.”
The central bank instructed that the nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd be terminated as soon as possible, but no later than February 29. It further directed that all pipeline transactions and nodal accounts be settled by March 15, 2024. “No further transactions shall be permitted thereafter,” the Reserve Bank of India declared.
In March 2022, the Reserve Bank of India directed Paytm Payments Bank to halt onboarding new clients immediately. Paytm Payments Bank is a subsidiary of One 97 Communications Ltd, which has a 49% share in the company. A payments bank is permitted to accept modest deposits of up to two lakh rupees. These firms cannot lend directly, but they may arrange and offer credit products. The RBI’s measures fall under a section of banking legislation that allows the regulator to instruct a bank in the best interests of depositors.
What are the restrictions on Paytm Payments Bank?
- Paytm Payments Bank has been forbidden to accept new deposits, credit transactions, or top-ups in any client accounts or linked instruments after February 29.
- Paytm Payments Bank has been advised to stop providing any banking services other than basic account access after February 29.
- The bank would also be prohibited from offering financial transfers, including those using India’s famous Unified Payment Interface (UPI) facility, according to the RBI.
What’s allowed?
- Paytm Payments Bank is allowed to deposit interest, rewards, and refunds into client accounts.
- Existing users can withdraw or use their funds without restriction across a variety of accounts and instruments, including savings bank accounts, prepaid instruments, FASTags, and National Common Mobility Cards (NCMC).
A payment bank can accept minor deposits of up to 200,000 Indian rupees. They are not permitted to lend directly, but they can arrange and offer loan products.
Paytm Payments Bank must fulfill any outstanding transactions and nodal account obligations started on or before February 29 by March 15.
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