The Reserve Bank of India (RBI) has restricted Paytm Payments Bank from accepting customer deposits starting March 1, 2024. Chaos and panic have ensued among Paytm users, questioning the impact on their wallet balances and the ability to use the Paytm app for day-to-day transactions.
Let's delve into the details of the RBI's statement, understand the implications for customers, and explore the reasons behind these restrictions.
What does the RBI Notification say?
The central bank's notification outlines specific directives for Paytm Payments Bank (PPBL):
i. No additional deposits, credit transactions, or top-ups will be allowed in customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, 2024, except for interest, cashbacks, or refunds.
ii. Withdrawal or utilization of balances by customers, including savings accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc., are permitted without restrictions, up to their available balance.
iii. No banking services, other than those mentioned in (ii), such as fund transfers (regardless of services like AEPS, IMPS, etc.), BBPOU, and UPI, will be provided by the bank after February 29, 2024.
iv. The Nodal Accounts of One97 Communications Ltd. and Paytm Payments Services Ltd. are to be terminated by February 29, 2024, at the latest.
v. Settlement of all pipeline transactions and nodal accounts initiated on or before February 29, 2024, should be completed by March 15, 2024, with no further transactions permitted thereafter.
Action against Paytm Payments Bank Ltd under Section 35A of the Banking Regulation Act, 1949https://t.co/bswaWHSxtk— ReserveBankOfIndia (@RBI) January 31, 2024
Why Did RBI Impose the Restrictions?
RBI imposed restrictions on Paytm Payments Bank due to persistent non-compliances and continued material supervisory concerns identified during an audit. This action follows a two-year restriction on onboarding new customers, which remains in effect.
How RBI’s Payment Bank Restrictions Impact You?
Existing customers of Paytm Payments Bank are unable to conduct essential banking operations such as credit, deposits, fund transfers, UPI transactions, FASTag toll payments, bill payments, and wallet usage. Customers can only withdraw balances from their accounts or other prepaid instruments.
Update: Paytm Payments Bank Limited, an associate of Paytm receives RBI directions. Paytm to expand its existing relationships with leading third-party banks to distribute payments and financial services products.— Paytm (@Paytm) January 31, 2024
Read more here: https://t.co/NsPCOxp6VJ pic.twitter.com/fQjozyR11m
Will the Restrictions Impact Paytm App Users?
No, Paytm app users are not affected as it falls under the parent company, One97 Communications. Unified Payment Interface (UPI) transactions will continue to function on the app.
What happens to Users of Paytm Fastag or its National Common Mobility Card?
Customers can utilize balances for Paytm Fastag or National Common Mobility Card but cannot recharge these instruments with additional funds from March 1.
What Happens If Users’ Paytm app is linked to PBPL?
There are no restrictions on withdrawing money from Paytm Payments Bank. Users can freely transfer money out of the wallet and bank accounts but cannot receive money starting March 1.
Will Users Be able to withdraw Money from Paytm Payments Bank accounts?
Yes, users can withdraw money and transfer funds from Paytm Payments Bank accounts without any restrictions.
Are Users’ Money Safe With Paytm Payment Bank?
Paytm reassures users that their money is safe, and there are no restrictions on withdrawing existing balances after February 29, 2024.
"Your money is safe with the Bank…There is no restriction on withdrawal of money from your existing balance even after Feb 29, 2024. For any further assistance, please reach out to us via the 24x7 help section on the App," Paytm said in an email to its users read.
What Does Paytm say?
Paytm communicates to users that the app will continue to function normally, expressing gratitude for their support and commitment to serving the nation compliantly.
“To every Paytmer, Your favourite app is working, will keep working beyond 29 February as usual. I with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance. India will keep winning global accolades in payment innovation and inclusion in financial services - with PaytmKaro as the biggest champion of it,” Vijay Shekhar Sharma, Founder and CEO, PayTM.
To every Paytmer,— Vijay Shekhar Sharma (@vijayshekhar) February 2, 2024
Your favourite app is working, will keep working beyond 29 February as usual.
I with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full…
What Will Paytm do Now?
Paytm states that it will promptly comply with RBI's directions, expecting a potential annual EBITDA impact of Rs 300 to 500 crore while aiming to improve profitability.
How Many Customers Does Paytm Have?
According to Paytm Payments Bank’s official website, it has over 300 million wallets, 30 million bank accounts, and more than 100 million KYC customers, with 0.4 million users added each month. Additionally, PayTM is the largest issuer of FASTags, with over 8 million units issued.
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