The Reserve Bank of India (RBI) has taken significant regulatory measures against Paytm Payments Bank Ltd (PPBL) on January 31, which include a ban on accepting fresh deposits and making credit transactions.
This is not a first time that the RBI has imposed major business restrictions on Paytm Payments Bank. Earlier, in a press release issued on March 11, 2022, the RBI invoked its powers under section 35A of the Banking Regulation Act, 1949, to immediately halt the onboarding of new customers by PPBL. This decision was based on findings from the Comprehensive System Audit report and subsequent compliance validation report by external auditors, which highlighted ongoing material supervisory concerns and non-compliance issues within the bank.
Effective February 29, 2024, PPBL will face several restrictions and changes as directed by the RBI:
- No Further Deposits or Credit Transactions: The bank will not be allowed to accept new deposits or credit transactions in customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards (NCMC), etc., except for interest, cashbacks, or refunds.
- Unrestricted Withdrawals and Utilization: Customers will still have the freedom to withdraw or utilize the balances in their accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, and NCMC cards, up to the available balance.
- Limitation on Banking Services: Starting February 29, 2024, PPBL will not be permitted to offer any other banking services, including fund transfers (such as AEPS, IMPS, etc.), BBPOU, and UPI facilities.
- Termination of Nodal Accounts: The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. will be terminated promptly, with a deadline of no later than February 29, 2024.
- Pipeline Transactions Completion: Settlement of all pipeline transactions and nodal accounts (related to transactions initiated on or before February 29, 2024) must be completed by March 15, 2024, with no further transactions permitted thereafter.
