The Reserve Bank of India (RBI) has recently taken significant measures against Paytm Payments Bank Limited (PPBL), issuing orders that impact its ability to onboard new customers and engage in certain financial transactions. 

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RBI’s Restrictions on Paytm Payments Bank:

On Wednesday, the RBI directed Paytm Payments Bank to halt the onboarding of new customers and cease further deposits or credit transactions after February 29, 2024. No additional transactions, including top-ups, shall be allowed in various customer accounts, prepaid instruments, wallets, FASTags, NCMC cards etc , beyond the specified date.

While the directive restricts new transactions, customers are allowed to withdraw or utilize their existing balances without any restrictions, up to the available balance in their accounts, covering savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc.

Beyond February 29, 2024, Paytm Payments Bank is prohibited from offering additional banking services, excluding withdrawals and utilization of balances. This includes fund transfers (such as AEPS, IMPS, etc.), BBPOU, and UPI facilities.

Source: Gold Andhra News

The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are required to be terminated promptly, with a strict deadline set for not later than February 29, 2024.

The RBI mandates the completion of settlement for all pipeline transactions and nodal accounts (initiated on or before February 29, 2024) by March 15, 2024. After this date, no further transactions will be permitted.

Prior to these directives, the Indian Highways Management Company (IHMCL), an arm of the National Highways Authority of India (NHAI), had barred Paytm Payments Bank from issuing new FASTags. This action was taken due to non-compliance with the parameters outlined in the service-level agreement.

Source: Fynocrat

Gaurav Goel, Founder-Director of Fynocrat Technologies, expressed concerns over the RBI’s measures, emphasizing that the central bank has cited ongoing non-compliance and supervisory concerns. He highlighted that while Paytm’s banking operations are impacted, users can still utilize Paytm for digital payments as long as their accounts are linked to an external bank. Goel cautioned that this development could have a negative impact on Paytm’s existing customers and might influence the company’s stock prices in the short to medium term.