RBI imposes major business restrictions on Paytm Payments Bank

The services offered to the bank's existing customers will not be affected

The Reserve Bank of India (RBI) on January 31 imposed major business restrictions on Paytm Payments Bank including accepting fresh deposits and doing credit transactions after February 29.

On March 11, the RBI barred Paytm Payments Bank from onboarding new customers.

The central bank said a 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.

No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime, RBI said.

The RBI, however, clarified that the withdrawal or utilisation of balances by the lender's customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, upto their available balance.

Further, no other banking services, other than those referred in (ii) above, like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after February 29, 2024.

The central bank also asked to terminate the Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. at the earliest, in any case not later than February 29, 2024.

The RBI directed the payments bank to settle all pipeline transaction and nodal accounts by March 15 and no further transaction shall be permitted thereafter.