The Reserve Bank of India (RBI) has imposed restrictions on Paytm Payment Bank, preventing the onboarding of new customers
Paytm Payments Bank Ltd (PPBL) has been severely punished by the Reserve Bank of India (RBI) after audit reports revealed the bank's continuous serious supervision issues and repeated failure to comply with regulations.
In response to these findings, RBI, exercising its powers under Section 35A of the Banking Regulation Act, 1949, has directed PPBL to stop onboarding new customers effective immediately, and the bank is also prohibited from undertaking further deposits or credit transactions after February 29, 2024
This regulatory move is the result of a comprehensive system audit report and subsequent compliance validation report conducted by external auditors. These reports revealed a continued lack of compliance within the bank, necessitating further supervisory action. The RBI's directive includes specific instructions regarding customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, and other services provided by PPBL.
Customers of Paytm Payments Bank will still be able to withdraw or utilize balances from their accounts, including savings and current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc., without any restrictions up to their available balance. However, the bank is prohibited from providing various banking services, such as fund transfers (including AEPS, IMPS, etc.), BBPOU, and UPI facilities, after February 29, 2024.
Additionally, One97 Communications Ltd. and Paytm Payments Services Ltd.'s Nodal Accounts have been terminated under the RBI's directive. The finalization of account termination is due on February 29, 2024. It is also required that by March 15, 2024, all nodal accounts and pipeline transactions that started on or before February 29th be settled.
This regulatory action underscores the RBI's commitment to addressing non-compliance issues within financial institutions and ensuring the stability and integrity of the banking sector. The measures taken aim to rectify the identified concerns through a combination of restrictions on services, termination of specific accounts, and a timeline for resolution of pending transactions.
