RBI Imposes Restrictions on Paytm Payments Bank

In a significant move, the Reserve Bank of India (RBI) has imposed major business restrictions on Paytm Payments Bank, effective from February 29, 2024. The restrictions include the cessation of accepting fresh deposits and conducting credit transactions. This decision follows the RBI’s earlier directive in March 2022, which barred Paytm Payments Bank from onboarding new customers.

For users with money in Paytm Wallet or Paytm Bank, here’s what to expect:

Account Operations Until February 29, 2024:

Customers can continue using services as usual, making deposits, credit transactions, and top-ups on their accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., until February 29, 2024.

Restrictions After February 29, 2024:

After this date, users will no longer be able to make deposits, credit transactions, or top-ups. However, existing customers can still access their accounts, withdraw funds, and utilize services like FASTag up to the available balance.

Interest, Cashbacks, and Refunds:

While deposits and transactions will be restricted, other features like interest, cashbacks, and refunds will still be allowed after February 29, 2024.

Pipeline Transactions and Nodal Accounts Settlement:

All pipeline transactions and nodal accounts initiated on or before February 29, 2024, must be completed by March 15, 2024. No such transactions will be permitted post-March 14.

Impact on Digital Services of Paytm:

The RBI’s actions primarily target Paytm’s banking operations, allowing users to continue utilizing Paytm for digital payments as long as their account remains connected to an external bank.

Paytm App and UPI Usage:

Users can continue to use the Paytm app and UPI through Paytm without any restrictions. The app is owned by the parent company, and its usage remains unaffected.

Linked Accounts:

If the Paytm app or the wallet is linked to an account maintained with Paytm Payments Bank, customers can use the app for fund usage without any restriction until February 29, 2024. However, no credits will be allowed into the bank account or wallet from March 1, 2024.

Prepaid Instruments, FASTag, NCMC Services:

The balance available in prepaid instruments, FASTag, NCMC transit cards, etc., can be used, withdrawn, or transferred without restrictions. However, any top-ups or further credits into these accounts are permitted only until February 29, 2024.

The stock declined after the Reserve Bank of India imposed major restrictions on the company’s lending business which also includes a prohibition on accepting fresh deposits and doing credit transactions after February 29. Mutual funds, insurance, and provident funds lost around Rs 585 crore after shares of One97 Communications Ltd, which runs Paytm, crashed over 20 percent at the open on February 1, following RBI’s crackdown on its lending business.

(With inputs from agencies)

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