RBI asks Paytm Payments Bank to stop almost all services after Feb 29

The direction follows persistent non-compliances and continued material supervisory concerns, the central bank said in a statement.

PTI, Mumbai, Jan 31, 2024 : In a major action against Paytm Payments Bank (PPBL), the Reserve Bank on Wednesday directed the lender to stop accepting deposits or top-ups in customer accounts, wallets, FASTTags and other instruments after February 29.

However, any interest, cashbacks, or refunds may be credited back to customers anytime.

The direction follows persistent non-compliances and continued material supervisory concerns, the central bank said in a statement.

On March 11, 2022, the RBI had barred PPBL from onboarding new customers with immediate effect.

Paytm group firm PPBL did not offer any comments on the RBI’s direction against the bank.

“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,” the RBI said.

Further, withdrawal or utilisation of balances by its customers from their accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, and National Common Mobility Cards are to be permitted without any restrictions, up to their available balance.

“No other banking services, other than those … like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc), BBPOU and UPI facility should be provided by the bank after February 29, 2024,” it added.

RBI also said the ‘nodal accounts’ of One97 Communications Ltd and Paytm Payments Services are to be terminated at the earliest, in any case not later than February 29, 2024.

One97 Communications, which owns Paytm brand, holds a 49 per cent stake in Paytm Payments Bank Limited but classifies it as an associate of the company and not as a subsidiary.

Settlement of all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) should be completed by March 15, 2024 and no further transactions would be permitted thereafter, RBI added.

Earlier, Indian Highways Management Company (IHMCL), the arm of NHAI, had barred Paytm Payments Bank from issuing fresh FASTags after it found that Paytm Payments Bank was not following the parameters prescribed in the service-level agreement.