In a major blow to Paytm Payments Bank Limited, an associate of Paytm, the Reserve Bank of India (RBI) on Wednesday ordered the lender to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags and other prepaid instruments after February 29, 2024.
“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, cashbacks, or refunds which may be credited anytime,” the RBI said in an official statement.
The central bank said it had in March 2022 asked the Paytm Payments Bank to stop onboarding new customers.
However, a 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 RBI said, without disclosing details.
The action against Paytm Payments Bank was taken under Section 35A of the Banking Regulation Act, 1949, the regulator said.
What Happens To Your Money In Paytm Payments Bank
Existing customers can withdraw or use their available balance from their accounts without any restrictions.
They can use their available balance from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc.
Meanwhile, the RBI directed the Paytm Payments Bank to settle all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) by March 15, 2024, and that no further transactions will be permitted thereafter.
No other banking services like fund transfers, Bharat Bill Payment Operating Unit (BBPOU), and Unified Payments Interface (UPI) facility will be provided by the bank after February 29, 2024.
Paytm Payments Bank, an associate of One 97 Communications Limited (OCL), said it is taking “immediate steps” to comply with the RBI’s directions.
OCL, as a payments company, works with various banks (not just Paytm Payments Bank), on various payments products, the company said in a statement on Thursday.
“We now will accelerate the plans and completely move to other bank partners. Going forward, OCL will be working only with other banks, and not with Paytm Payments Bank Limited. The next phase of OCL’s journey is to continue to expand its payments and financial services business, only in partnerships with other banks,” it said.