The Reserve Bank of India (RBI) on Friday extended the deadline for Paytm Payments Bank services to March 15, from the previous February 29. It said the customers can make deposits, credit transactions, prepaid services, wallets, FASTags, National Common Mobility Cards till March 15, 2024.
Earlier, the RBI disallowed the Paytm subsidiary from accepting further deposits, top-ups or credit transactions into its operated wallet or accounts from February 29.
The central bank added that it had put certain business restrictions on Paytm Payments Bank Ltd, operated by One97 Communications, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949. had put certain business restrictions on Paytm Payments Bank Ltd (PPBL or the bank), vide Press Releases dated March 11, 2022 and January 31, 2024.
Keeping in view the interest of customers (including merchants) of PPBL who may require a little more time to make alternative arrangements and the larger public interest, the RBI said: "No further deposits or credit transactions or top-ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, etc. after March 15, 2024 (extended from the earlier stipulated timeline of February 29, 2024), other than any interest, cashbacks, sweep in from partner banks or refunds which may be credited anytime."
It added: "No banking services, other than those referred in (ii) above, like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after March 15, 2024. However, for the purpose of (ii) above (viz. for withdrawal or utilisation of available balance by customers or wallet holders), such fund transfers including AEPS, IMPS and UPI may be allowed anytime."
The RBI said: "Settlement of all pipeline transactions in nodal accounts referred to in item (iv) above (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024, and no further transactions shall be permitted thereafter."
It is also directed that withdrawals upto their available balance should be facilitated by the bank from all accounts and wallets, excluding the ones that are frozen or lien marked by Law Enforcement or judicial authorities.
The central bank also directed that Paytm Payments Bank shall facilitate a seamless withdrawal of customer deposits that are parked with partner banks under the automatic ‘sweep-in sweep-out’ facility without causing any inconvenience to such customers.
Things that haven't changed
RBI said the 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 Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd maintained by Paytm Payments Bank Limited are to be terminated at the earliest, in any case not later than February 29, 2024.
RBI also released a set of FAQs on Paytm Payments Bank. RBI Governor Shaktikanta Das after the MPC meeting earlier this month had said that the central bank will issue FAQs for all stakeholders. “Over the last few days, we have received a lot of queries. We have noted them down. Based on that, we will be issuing an FAQ sometime next week,” Governor Das said.
The FAQs covered different aspects of the directions and assuring that customers of the bank wouldn’t be impacted because of the central bank curbs.
Earlier after the MPC meeting, RBI defended its step and said the action was taken against the fintech player after persistent non-compliance.
"We don't want to discuss details of action on Paytm Payments Bank. This is supervisory action for persistent non-compliance. Such action is invariably preceded by months and sometimes years of bilateral engagement where we point out the deficiencies but also give time to take corrective action. As a regulator, it is incumbent upon us to protect the consumer," RBI Deputy Governor Swaminathan J said.
RBI had said that a Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the Paytm arm. Based on that, the central bank imposed various restrictions on the bank.
Last week, RBI Governor Das said that all its actions, including certain restrictions it imposed on Paytm's associate bank, are in the best interest of the public.
"All our actions being a responsible regulator and supervisor are in the best interest of systemic stability and protection of depositors or customers' interest. These aspects cannot be compromised. Individual entities should be mindful of such aspects for their long term success," Governor Das said.
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