The Reserve Bank of India (RBI) has implemented substantial restrictions on Paytm Payments Bank (PPBL), effective from February 29. The restrictions encompass a cessation on new deposits, top-ups in customer accounts, and the utilization of prepaid instruments, wallets, and FASTags.
Concerns Raised by RBI: Regulatory Intervention in PPBL’s Operations
The move by the central bank signals concerns about PPBL’s operations, pointing towards regulatory intervention due to observed issues or non-compliance in the bank’s functioning. Notably, RBI had previously directed PPBL to halt the onboarding of new customers on March 11, 2022. However, subsequent audits revealed persistent non-compliance, leading to the current restrictions.
Prohibitions and Exceptions Under Banking Regulation Act, 1949
Under section 35A of the Banking Regulation Act, 1949, RBI has imposed a comprehensive set of restrictions on PPBL. The bank is prohibited from accepting new deposits, engaging in credit transactions, or facilitating top-ups from February 29, 2024. However, exceptions have been outlined, allowing interest, cashbacks, or refunds to be credited at any time. Customers retain the ability to withdraw or utilize their balances without restrictions, up to the available balance.
Restricted Banking Services and Deadline for Settlement
Effective from February 29, 2024, PPBL faces restrictions on offering additional banking services beyond withdrawals and account utilization. This includes the discontinuation of services such as fund transfers, BBPOU, UPI facilities, among others. The RBI has set a deadline for the settlement of all pipeline transactions and nodal accounts related to transactions initiated on or before February 29, 2024. These must be settled by March 15, 2024, according to the RBI’s statement.
The stringent directives issued by the RBI aim to ensure compliance and safeguard customer interests in the digital payment ecosystem. The central bank’s intervention underscores the importance of adherence to regulations and standards in the rapidly evolving financial technology landscape. As PPBL navigates these restrictions, stakeholders and customers will closely monitor developments in the aftermath of the RBI’s regulatory action.
I have some amount in my Paytm Wallet. What will happen to that amount?
If you are using Paytm Wallet and the linked bank account is also Paytm Payments Bank then you wont be able to add more amount in the wallet. If the connected bank account is other than Paytm Payments Bank, you can use Paytm UPI to pay untill the amount is saturated. You can also transfer the amount in PPB to other bank accounts using UPI.
What will happen to Paym FASTag?
The Paytm FASTag se service will discuntinue after 29th February 2024. Users will not be able to pay at Toll Plaza using Paytm App. Hence are requested to switch to other FASTag service providers.
Will you be able to take loans from Paytm?
No, the loan service will also discontinue but if you have already taken loan from Paytm, you can continue repayment of the loan as usual.
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