The Reserve Bank of India (RBI) has imposed additional restrictions on Paytm Payments Bank Ltd (PPBL) due to “persistent non-compliances” with the banking regulations. The RBI has ordered PPBL to stop accepting any deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024. The only exceptions are interest, cashbacks, or refunds that may be credited anytime.
The RBI said that the decision was based on the comprehensive system audit report and the compliance validation report of the external auditors, which revealed several violations by PPBL. The RBI had earlier stopped PPBL from onboarding new customers in March 2022.
The RBI has allowed PPBL’s customers to withdraw or use their balances from their accounts without any restrictions, up to their available balance. However, PPBL will not be able to provide any other banking services like fund transfers, BBPOU and UPI facility after February 29, 2024. The RBI has also directed PPBL to terminate the nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd. at the earliest.
The RBI’s action is a major setback for PPBL, which claims to have over 64 million customers and is one of the leading players in the digital payments space in India. PPBL is a subsidiary of One97 Communications Ltd, which also owns Paytm, India’s largest digital payments platform.