The Reserve Bank of India (RBI) has imposed significant operational restrictions on Paytm Payments Bank, starting from February 29. These measures include a ban on accepting new deposits and conducting credit transactions. This decision followed an earlier RBI directive on March 11, which prohibited the bank from adding new customers.
What Happened? The RBI’s decision stems from a Comprehensive System Audit report and subsequent reviews by external auditors. These reports highlighted continuous non-compliance issues and serious supervisory concerns within the bank, necessitating further regulatory action.
Key restrictions include the prohibition of any new deposits or credit transactions in customer accounts, prepaid instruments, wallets, FASTags, and National Common Mobility Cards (NCMC), after February 29, 2024. This restriction, however, doesn’t apply to interest, cashback, or refunds, which can be credited at any time.
What to know? Customers will still be able to withdraw or use their existing funds in accounts such as savings, current accounts, and prepaid instruments without limitations, up to their available balance. However, the bank will not be able to offer other banking services, including various fund transfer services, after the specified date.
Moreover, the RBI has instructed Paytm Payments Bank to close the Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd by February 29, 2024. The RBI directs the bank to settle all pipeline transactions and nodal accounts by March 15, after which it will not permit any further transactions.
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