The ongoing crisis around Paytm Payments Bank Limited (PPBL) has left many traders and investors confused as they struggle to switch their default PPB accounts to another bank on the Paytm Money app.
Online stock brokerages, including Paytm Money, Groww, Zerodha, Upstox, offer users to link their trading/demat accounts with multiple banks, including PPBL.
This primary bank account is used for both adding money to on the platform before buying stocks and withdrawing funds (dividend credits for the shares they hold) to and from the trading account.
Since the RBI’s ban on PPBL from accepting deposits or allowing credit transactions post-February 29, users will now have to add another primary bank account.
However, many remain stuck with the process claiming that the option remains blocked for them on the app.
Paytm Money issued a statement saying it is working with stakeholders to ensure a smooth transition, while Groww claimed to fixed the issue.
Meanwhile, Zerodha will go out to communicate the update to its clients, who have not unmapped it on their own over the next week.
“Efforts are underway to enhance the process of changing your default bank account, as we engage in constructive discussions with Mutual Fund Registrar & Transfer Agents (RTAs) and Asset Management Companies (AMCs). We will let you know about the progress once everything is finalised,” Paytm Money said in a blog on February 3.
What happened
Despite efforts, Paytm Money users continue to remain stuck in the process of changing bank accounts.
“I have set PPBL as my default account for mutual fund SIP auto-debits. Every time I initiate the process of transferring banks, it shows change of default mandate has been temporarily blocked and asks (me) to try later. They keep telling me that they are working on it but it has been almost a week,” two users said.
Another account holder said he was unable to change the default bank (PPB) for mutual fund investment even after successfully adding another bank account.
Many took to social media to express similar concerns.
“I invested in mutual funds through Paytm Money and PPB is a default account. I have tried so many times to change it. The bank will stop working, then what will happen to my money? How can I redeem the fund?,” a user said.
A senior expert in the space said changing primary bank accounts is standard practice and should not come with many issues.
“A broker must shift the bank account if the modification request is sent by the client with the required proof. They cannot deny it. It could be that their (Paytm Money) backend system is not up to the mark to deal with this or it’s a CDSL issue,” he added.
Central Depository Services Ltd, or CDSL, is a central securities depository in India, which helps investors or shareholders to store their shares and other tradable instruments in electronic form.
The dividends made by users on shares are disbursed by CDSL and transferred to their primary bank accounts, wherein online brokerages (depository participants) act as a link between the two.
Another executive of a brokerage firm explained that the change of bank account is technically updated by the CDSL and online broking companies act as a mere tech platform.
“This is Paytm Payments Bank-specific problem. There are some issues with those account transfers from CDSL’s end, and hence this may be taking time,” he added.
Some of the users at Groww complained of going through an offline process to change their PPBL accounts, wherein they were asked to send request forms via posts to make a switch.
However, brokers said that this has been addressed after some changes in the system.
“Customers will now be able to automatically change their demat bank accounts opened in Groww. We are communicating the same to our customers,” the spokesperson said.
Meanwhile, Zerodha is said to be undertaking the process smoothly, while refraining from sharing the number of PPB account holders on their system.
“There are no issues. Our clients can delink their Paytm accounts and map another. We will also communicate this to clients who have not unmapped it on their own over the next week and link to another bank account,” the spokesperson at Zerodha said.
He added that users can make a switch even after the February 29 deadline for receiving credit in PPBL, but they will have to switch the accounts to make a withdrawal.
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