RBI vide its Press Release dated January 31, 2024 initiated an action against Paytm Payments Bank Limited ("PPBL"). RBI in exercise of its powers under Section 35A of Banking Regulation Act, 1949 directed PPBL the following:
- 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, except for any interest, cashbacks, or refunds which may be credited anytime.
- Withdrawal or utilisation of balances by its customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, up to their available balance.
- No other banking services like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after February 29, 2024.
- The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated at the earliest, in any case not later than February 29, 2024.
- Settlement of all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024 and no further transactions shall be permitted thereafter.
RBI in its press release stated that it had ordered PPBL to stop onboarding of new customers with immediate effect vide Press Release dated March 11, 2022. However, validation report of external auditors revealed non compliance and continued supervisory concerns which warranted further supervisory action.
Originally published 27 March 2024
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