Paytm cannot accept new deposits or credit transactions: Here is why

The Reserve Bank of India (RBI) has barred Paytm Payments Bank Ltd (PPBL) from accepting deposits in any customer accounts or wallets. The restrictions come into effect on February 29. This will impact services including FASTag and National Common Mobility Card, transactions for which go through PPBL. Moreover, UPI transactions through Paytm currently require the “@paytm” ID issued by the PPBL. This means that once the restrictions come into effect, customers would not be able to make UPI transactions through Paytm. Paytm has said that it is in talks with banks to find alternative bank services for its UPI transactions.

Paytm’s parent company One97 Communications Ltd (OCL) has said that they will stop working with the PPBL and comply with the RBI directions. “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 the start 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,” read a statement issued by Paytm.

Paytm also said that customers can continue to use their existing balance in their Fastag wallets. “You can continue using the existing balances on your Paytm FASTag. We started our journey of working with other banks over the last two years, which we will now accelerate,” the company said. 

The RBI’s action comes after a Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed alleged non-compliances and material supervisory concerns in the bank, warranting further supervisory action, the RBI said in a statement on Wednesday, January 31.

Earlier in March 2023, the RBI directed PBBL to stop onboarding any new customers, based on “certain material supervisory concerns observed in the bank.”

In a press release dated January 31, 2024, the RBI said that no further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc, after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime. 

“Withdrawal or utilisation of balances by its customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, upto their available balance,” it clarified.

(With IANS inputs)