A new advisory has been issued by Reserve Bank of India (RBI) on Friday, urging all the customers of Paytm Payments Bank who use UPI services to switch to other banks by March 15, 2024.
Is it due to the regulatory concerns that the restrictions have been imposed by the regulator on bank’s operations.
What has RBI Urged to Paytm Customer?
The affected users are the customers of Paytm Payments bank UPI service have been asked by the RBI to switching their UPI account with any other bank before March 15.
These customers are not left high and dry since the smooth migration of the “@paytm” handles to new banks shall be facilitated by the National Payments Corporation of India (NPCI) in order to minimize the disruption.
The mandate or instructions to Paytm Payments Bank also blocks them to add any new users until and unless all the existing ones are migrated successfully.
As many as 5 new banks shall be added as the certified Payment Service Provider (PSP) banks to handle the high-volume UPI transactions, eventually diversifying the risk.
The merchants who have been using Paytm QR codes have been asked to have settlement accounts with PSP banks other than the Paytm Payments Bank.
Do this mean that all services of the Paytm Payments Bank will seize to function? The answer is no since all the services (balance checks, etc.) other than UPI transactions can still be done after March 15.
It has been under the grounds of technological deficiencies and governance issues and to ensure the smooth functioning of UPI, eventually mitigating potential risks that the “lender of the last resort” has imposed these restrictions on the bank.
Same Goes for Paytm Payment Banks’ FASTag and NCMC
Additionally, the customers who use Paytm Payments Banks’ FASTag and National Common Mobility Cards (NCMC), have also been advised to make alternate arrangements before March 15, 2024.
In its press release, RBI said that “All the above actions are undertaken in the sole interest of protecting the customers and payment system from any possible disruptions and are without any prejudice to the regulatory or supervisory actions initiated by RBI against Paytm Payments Bank”.
