HIGHLIGHTS
- RBI ordered Paytm Payments Bank to stop accepting fresh deposits in account or wallets after February 29th.
- Paytm Payments Bank, an associate of One 97 communication limited (OCL) said it is taking “immediate steps” to comply with RBI directions.
- Due to this RBI restriction Paytm lost over 500 crores.
Reserve Bank of India (RBI) on January 31st ordered Paytm Payments Bank to stop accepting fresh deposits in its accounts or popular wallets after February 29th, 2024. Paytm Payments Bank which is part of the one of India’s largest payment firms Paytm was told by the regulator that it will not able to take fresh deposits facilitate credit transactions, or offer fund transfers, including Unified Payment Interface (UPI) facility after February 29th.
“No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC card, etc.” After February 29th, 2024 other than any interest, cashbacks, or refunds which may be credited anytime,” Yogesh Dayal, Chief General Manager with the central bank said in a press statement.
According to the statement, Withdrawal or utilization of balances by it customers from their accounts including saving bank accounts, current accounts, prepaid instruments, FasTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, up to their available balance.
What is the reason behind RBI putting Restrictions on Paytm Payments Bank?
RBI said it has in March 2022 asked the Paytm Payments Bank to stop adding new customers. However, the Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the back, warranting further supervisory action, RBU said, without disclosing details.
The action against Paytm Payments Bank was taken under Section 35A of the Banking regulation Act, 1949, the Central Bank added.
Paytm Payments Bank said on RBI Restrictions
Paytm Payments Bank, an associate of One 97 communication limited (OCL) said it is taking “immediate steps” to comply with RBI directions. OCL, as a payments company, works with various banks (not just Paytm Payments Bank), the fintech company said in a statement on February 1st.
“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” Paytm said in Statement.
Update: Paytm Payments Bank Limited, an associate of Paytm receives RBI directions. Paytm to expand its existing relationships with leading third-party banks to distribute payments and financial services products.
Read more here: https://t.co/NsPCOxp6VJ pic.twitter.com/fQjozyR11m— Paytm (@Paytm) January 31, 2024
Paytm lose over Rs 500 Crore due to RBI Action
“Depending on the nature of the resolution, the company expects this action to have a worst case impact of Rs 300 to Rs 500 crores on its annual EBITDA going forward. However the company expects to continue on its trajectory to improve its profitability.”
