What are the key points you need to be aware of about the RBI action on Paytm Payments Bank

What are the key points you need to be aware of about the RBI action on Paytm Payments Bank

Action by RBI on Paytm Payments Bank due to supervisory and compliance concerns

In March 2022, the RBI has barred Paytm Payments Bank from Onboarding New Customers

India's Banking Services regulator, the Reserve Bank of India, has taken strict action against the #PaytmPaymentsBank and has banned the entity from accepting fresh deposits and making credit transactions with effect from 29 February 2024.

Action taken under Sec 35A of the Banking Regulation Act 1949

This is what it means for Paytm Payment Bank customers:

  • Paytm Payments Bank will not be allowed to accept fresh deposits or undertake credit transactions or top-ups, including prepaid instruments, FASTag, Popular Wallet accounts, National Common Mobility Cards (NCMC), etc.

  • Banking services like fund transfers like AEPS, IMPS, BBPOU, UPI will NOT be permitted by the Bank after 29 February 2024.

  • All additional services allowed by RBI will be discontinued for Paytm Payments Bank for its customers after 29 February 2024.

However, Interest, cashback and refunds will be credit as and when due. The customers will also be permitted to withdraw and utilise the balances in their Paytm Payments Bank accounts without any restrictions, till their balance is available. This supervisory action has been taken in the light of the RBIs Comperehensive System Audit report as well as the compliance validation report by the external auditors, who reported repeated and consistent non-compliance as well as substantial supervisory concerns.

How has Paytm Payments Bank responded:

One 97 Communications Limited, the parent company of PPBL, in its disclosure letter to the BSE and NSE on 1 February 2024 said that PPBL, an associate company of OCL is taking immediate steps to comply with RBI directions, including working with the RBI to address their concerns as quickly as possible. The letter further said:

The Company has been informed that this does not impact user deposits in their savings accounts, Wallets, FASTags, and NCMC accounts, where they can continue to use the existing balances. OCL, as a payments company, works with various banks (not just Paytm Payments Bank), on various payments products. OCL started to work with other banks since starting of the embargo. 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. We offer acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships. The Paytm Payment Gateway business (online merchants) will continue to offer payment solutions to its existing merchants. OCL’s offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine, will continue as usual, where it can onboard new offline merchants as well. With regard to the direction on termination of nodal account of OCL and Paytm Payments Services Limited (PPSL) by February 29, 2024, OCL and PPSL will move the nodal to other banks during this period. OCL will pursue partnerships with various other banks, to offer various payment products to its customers. OCL’s other financial services such as loan distribution, insurance distribution and equity broking, are not in any way related to Paytm Payments Bank Limited and are expected to be unaffected by this direction.


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