RBI bars Paytm Payments Bank from accepting deposits after February 29
This action follows persistent non-compliance and material supervisory concerns revealed in external auditors' reports. While customers are allowed to withdraw or use their balances without restrictions, no additional deposits or credit transactions will be permitted after the specified date
The Reserve Bank of India (RBI) has directed Paytm Payments Bank to cease accepting deposits, top-ups, and credit transactions in customer accounts, wallets, and FASTags after February 29, 2024. The move comes in response to persistent non-compliances and material supervisory concerns observed during a comprehensive system audit.
The RBI, in a statement, highlighted that the external auditors' reports indicated ongoing non-compliance issues, necessitating further supervisory action. Effective from March 1, 2024, no additional deposits or credit transactions will be permitted in any customer accounts, prepaid instruments, wallets, FASTags, or NCMC cards. However, exceptions are made for interest, cashback, or refunds, which may still be credited.
Customers will retain the freedom to withdraw or utilize their balances without restrictions, up to the available balance, in various accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, and National Common Mobility Cards.
This regulatory intervention follows the RBI's directions in March 2022, instructing Paytm Payments Bank to halt the onboarding of new customers immediately. Paytm Payments Bank, an affiliate of One 97 Communications Ltd, which owns a 49% stake, is categorized as a payments bank, allowed to accept small deposits up to 2 lakh rupees without engaging in direct lending activities. Instead, they can facilitate and sell loan products.
The RBI's actions fall under the purview of banking regulations, enabling the regulator to issue directives in the interest of depositors. As of now, Paytm has not responded to requests for comments on the situation.