The Reserve Bank of India (RBI) has prohibited digital payments bank Paytm Payments Bank from taking on new customers citing persisting non-compliance issues revealed during an external IT systems audit directed last year. The ban extends to adding funds across existing accounts like mobile wallets or UPI IDs from March 1st.
Paytm Payments Bank has also been instructed to transfer nodal account balances of its parent One97 Communications by March 15th while settlements for transactions initiated till February month-end need concluding by the same date. The sweeping crackdown stems from supervisory concerns raised previously.
All Financial Services Barred for Customers
As per RBI’s enforcement actions under the Banking Regulation Act, the payments bank cannot onboard new depositors or offer services facilitating credit transactions, cash top-ups, fund transfers and more from March 1st. Existing customers can only withdraw money while utilizing current wallet, FASTag or account balances.
This represents a major business disruption for Paytm and impacts millions of users who will need migrating accounts to other bank providers seamlessly for continuity which remains challenging in most cases.
This is a developing story, and more details are awaited.
We are also awaiting Paytm’s response.
