The Reserve Bank of India has taken action against Paytm Payments Bank after it directed the bank to not onboard new customers over supervisory concerns. In 2022, the RBI directed the bank to appoint an Income Tax audit firm to conduct a comprehensive System Audit of its IT system over non-compliance concerns.
The latest move by the RBI comes after the Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and warranted further action.
The RBI has exercised its powers under the Banking Regulation Act and has stopped the Paytm Payments Bank from offering some services to customers.
- No further deposits, credit transactions or top-ups will be allowed in any customer accounts, prepaid instruments, wallets, FASTags, or National Common Mobility Cards after February 29.
- Customers can utilise the money in their account for withdrawal, but no further deposits are allowed. The customers can utilise the existing amount in their FASTags, wallets, savings accounts, current accounts, etc.
- The bank cannot provide services like fund transfers, irrespective of the nature of the service, which will not be allowed after February 29. The customers will not be allowed to use the UPI facility of the bank either.
- The nodal accounts of One97 Communications Ltd, the parent company of Paytm, and the Paytm Payments Bank have been terminated by the RBI.
- For transactions initiated on or before February 29, all settlements have to be concluded by March 15, and no further transactions are permitted.