In a shocking turn of events, Paytm Payments Bank has been barred from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024.
Due to non-compliances and continued material supervisory concerns in the bank, the Reserve Bank of India on Wednesday instructed them not to onboard any new customers.
Paytm Payments Bank is an associate of the listed entity One 97 Communications Ltd, which holds a 49% stake in the unit.
The official statement added that the nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd should also be terminated at the earliest, and no later than 29 February, 2024.
It also ordered the settlement of all pipeline transactions and nodal accounts to be completed by March 15, 2024. No further transactions shall be permitted thereafter.
Why did RBI imposes major business restrictions on Paytm Payment’s Bank?
The apex bank has taken this action against Paytm in response to a comprehensive system audit report and subsequent compliance validation report conducted by external auditors.
The RBI had already directed the bank to appoint an Income Tax audit firm to conduct a thorough System Audit of its IT system due to worries about non-compliance back in 2022. This action follows the RBI’s earlier directive in March 2022, instructing PPBL to stop onboarding new customers immediately.
“The Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action,” the RBI announced in the laters hours of the day.
How will RBI’s action against Paytm Payments’ Bank impact customers?
– After February 29, customers won’t be able to make further deposits, credit transactions, or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, or National Common Mobility Cards.
– No new deposits will be accepted after the specified date, however, customers are still allowed to use the money in their accounts for withdrawals.
– Services like fund transfers and UPI facilities will not be available to customers after 29 February, 2024.
