In a significant development on Wednesday, the Reserve Bank of India (RBI) has imposed restrictions on Paytm Payments Bank, prohibiting it from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, effective after February 29, 2024.
This regulatory action by the central bank comes in response to a detailed system audit report and subsequent compliance validation report conducted by external auditors. The reports identified persistent non-compliances and ongoing material supervisory concerns within the bank, leading the RBI to take further supervisory action.
In a statement, the Reserve Bank of India declared, “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.”
As a consequence, Paytm Payments Bank is now barred from facilitating any additional deposits, credit transactions, or top-ups in customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after the specified date. However, the central bank clarified that interest, cashbacks, or refunds may still be credited at any time.
The RBI has directed the termination of nodal accounts associated with One97 Communications Ltd and Paytm Payments Services Ltd, emphasizing that this should be completed no later than February 29. Furthermore, the settlement of all pipeline transactions and nodal accounts has been mandated to conclude by March 15, 2024. The directive explicitly states, “No further transactions shall be permitted thereafter.”
It’s noteworthy that in March 2022, the RBI had previously issued directives to Paytm Payments Bank, instructing it to cease onboarding new customers with immediate effect. The latest restrictions mark a continuation of regulatory actions against the bank, signaling the RBI’s commitment to ensuring compliance within the financial sector. The development will likely have significant implications for Paytm Payments Bank and its customers, as they navigate the impact of these stringent measures imposed by the central bank.