The Reserve Bank of India (RBI) has directed Paytm Payments Bank to cease all deposits, credit transactions, or top-ups in customer accounts, including prepaid instruments, wallets, FASTags, NCMC cards, etc, effective February 29, 2024. The directive, based on persistent non-compliance revealed in external audit reports, prompts further supervisory action due to material concerns. 

Customers are allowed unrestricted withdrawal or utilization of balances up to their available balance in accounts, including savings and current accounts, prepaid instruments, FASTags, and National Common Mobility Cards. However, all banking services, except interest, cashback, or refunds, will cease after February 29, 2024.

RBI also mandates the termination of Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd by February 29, 2024. Settlement of pipeline transactions and nodal accounts initiated on or before February 29, 2024, must be completed by March 15, 2024, with no further transactions permitted thereafter.

In a previous directive in March 2023, RBI had instructed Paytm Payments Bank to halt onboarding new customers immediately. The bank was also mandated to appoint an IT audit firm for a comprehensive system audit of its IT system. Onboarding new customers would be subject to specific RBI permission based on the IT auditors’ report, addressing material supervisory concerns observed in the bank.

These stringent measures underscore RBI’s commitment to addressing compliance issues and ensuring the stability of financial institutions.

By : Kruthiga V S

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