No Services After February 29: RBI’s Stringent Measures Against Paytm Payments Bank

In a significant move aimed at addressing persistent non-compliances and material supervisory concerns, India’s central bank Reserve Bank of India (RBI) has taken decisive action against Paytm Payments Bank Ltd (PPBL). Citing its authority under Section 35A of the Banking Regulation Act, 1949, the RBI has issued a directive to PPBL.

Effective immediately, PPBL is prohibited from accepting new deposits or credit transactions, including top-ups, in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, 2024. However, exceptions are made for interest, cashbacks, or refunds, which may still be credited to accounts.

Customers of PPBL are permitted to withdraw or utilize balances from their accounts, including savings and current accounts, prepaid instruments, FASTags, and National Common Mobility Cards, without any restrictions, up to their available balance.

Furthermore, PPBL is restricted from providing any banking services beyond basic account withdrawals and utilization. This includes fund transfers via various platforms like AEPS, IMPS, BBPOU, and UPI facilities, effective from February 29, 2024.

The directive also mandates the termination of Nodal Accounts belonging to One97 Communications Ltd and Paytm Payments Services Ltd., entities closely associated with PPBL, by no later than February 29, 2024.

To ensure orderly transition and settlement, PPBL is required to complete all pipeline transactions and nodal account settlements, initiated on or before February 29, 2024, by March 15, 2024. No further transactions will be permitted beyond this deadline.

The RBI”s action follows its previous directive issued on March 11, 2022, which instructed PPBL to halt the onboarding of new customers. Subsequent comprehensive system audits and compliance validation reports from external auditors highlighted continued non-compliances, necessitating further regulatory intervention.