Explained: As RBI Imposes Curbs On Paytm Payments Bank, Here’s What It Means For Customers

The Reserve Bank Of India has imposed a set of restrictions on Paytm Payments Bank which will come into effect from February 29. This comes after “persistent non-compliance and continued material supervisory concerns” which now prohibits the bank from further deposits or credit transactions or top ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards among other things. The new rule is likely to not allow new users to create accounts on the platform.?

Reuters

"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, other than any interest, cashbacks, or refunds which may be credited anytime," Yogesh Dayal, a chief general manager with the central bank, said in a press statement.

What Will Happen To The Amounts That The Existing Users Have In Their Wallets, FASTags? account and Savings And Current Bank Accounts?

Representational Image/BCCL

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, the statement added.

Why Did RBI Take This Strict Action?

As per RBI, it had asked the Paytm Payments Bank to stop adding new customers in March 2022.?

The Comprehensive System Audit report and subsequent compliance validation report of?the external auditors revealed persistent non-compliances and continued material supervisory?concerns in the bank, warranting further supervisory action.

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This action has been taken by the central bank under Section 35A of the Banking Regulation Act, 1949.

How Has Paytm Payments Bank Reacted To RBI Restrictions?

In an official statement released online, the defaulter bank has responded that it is taking immediate steps to comply with the RBI’s directions.

Here’s the release: