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RBI bars Paytm Payments Bank from accepting deposits after Feb 29
RBI stops Paytm Payments Bank from accepting deposits after Feb 29
The Reserve Bank of India on Wednesday barred Paytm Payments Bank from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024.
The central bank's action against Paytm is in response to a comprehensive system audit report and subsequent compliance validation report conducted by external auditors.
“The 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,” the Reserve Bank of India said in a statement.
It added: "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."
The central bank directed that nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd should be terminated at the earliest, and no later than February 29.
It also ordered the settlement of all pipeline transactions and nodal accounts to be completed by March 15, 2024. “No further transactions shall be permitted thereafter,” RBI said.
In March 2022, the Reserve Bank of India issued directions to Paytm Payments Bank to stop onboarding new customers with immediate effect.
Paytm Payments Bank is an associate of the listed entity One 97 Communications Ltd, which holds a 49% stake in the unit.
A payments bank is allowed to take small deposits up to 2 lakh rupees. These entities are not allowed to lend directly, but can facilitate and sell loan products, according to Reuters.
The actions taken by the RBI are under a provision of banking regulations that allow the regulator to give directions to a bank in the interest of depositors. Paytm did not immediately respond to a Reuters request for comment.
