Paytm Payments Bank says RBI curbs won't affect user deposits in their savings accounts, Wallets, FASTags

Paytm Payments Bank Limited, an associate of One 97 Communications Limited, has clarified that the recent Reserve Bank of India's restrictions on it will not impact user deposits in their savings accounts, Wallets, FASTags, and NCMC accounts. It added that the users can continue to use the existing balances.

On Wednesday, the central bank imposed additional curbs on Paytm Payments Bank Ltd prohibiting it from operating its mobile wallet after February 29.

The RBI has barred PPBL from taking further deposits or undertaking credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, or National Common Mobility Cards, after February 29.

However, it will be allowed to credit any interest, cashbacks, or refunds into these accounts at any time, and customers are also free to withdraw or use their balances in these accounts without restrictions.

"The Company (OCL) would like to update that it has been informed by its associate, Paytm Payments Bank Limited (“PPBL”), that the Reserve Bank of India (“RBI”) vide its Press Release dated January 31, 2024, has given it further directions under section 35A of the Banking Regulation Act, 1949. PPBL is taking immediate steps to comply with RBI directions, including working with the regulator to address their concerns as quickly as possible. The Company has been informed that this does not impact user deposits in their savings accounts, Wallets, FASTags, and NCMC accounts, where they can continue to use the existing balances," the company said on Thursday.

The company further said OCL, as a payments company, works with various banks (not just Paytm Payments Bank), on various payments products. OCL started to work with other banks since starting of the embargo. "We now will accelerate the plans and completely move to other bank partners. Going forward, OCL will be working only with other banks, and not with Paytm Payments Bank Limited. The next phase of OCL’s journey is to continue to expand its payments and financial services business, only in partnerships with other banks," the company noted. 

Paytm's offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine, will continue as usual, where it can onboard new offline merchants as well, the company further noted.

The company further said OCL’s other financial services such as loan distribution, insurance distribution and equity broking, are not in any way related to Paytm Payments Bank Limited and are expected to be unaffected by this direction. 

The RBI in its Wednesday statement said: “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.” 

It added: "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."

The RBI directed that nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd should be terminated at the earliest, and no later than February 29. Besides, it asked the company to settle all pipeline transactions and nodal accounts by March 15, 2024. “No further transactions shall be permitted thereafter,” RBI said.