RBI Restricts Paytm Payments Bank from Accepting New Deposits.
RBI Imposes Restrictions on Paytm Payments Bank: Here’s Why
Recently, the Reserve Bank of India (RBI) directed Paytm Payments Bank, a subsidiary of Paytm, to halt the acceptance of fresh deposits in its accounts and popular wallets after February 29, 2024.
The regulatory directive prohibits Paytm Payments Bank from accepting new deposits, facilitating credit transactions, or offering fund transfers, including the Unified Payments Interface (UPI) facility, beyond the specified date. However, existing customers can withdraw or use their balances without any restrictions.
The RBI had initially instructed Paytm Payments Bank to stop onboarding new customers in March 2022. Subsequent audits revealed persistent non-compliance and supervisory concerns, leading to the recent action under Section 35A of the Banking Regulation Act, of 1949.
In response to the RBI’s restrictions, Paytm Payments Bank stated that it is swiftly taking steps to comply with the regulatory directives. Additionally, Paytm’s parent company, One 97 Communications Limited (OCL), announced plans to move away from Paytm Payments Bank and collaborate exclusively with other banking partners.
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
Due to the RBI’s order, the financial impact on Paytm is estimated to be between ₹300 crore to ₹500 crore in annual earnings. Despite this setback, Paytm remains optimistic about its profitability and plans to continue expanding its payments and financial services business through partnerships with other banks.