RBI places additional curbs on Paytm Payments Bank amid 'persistent non-compliances'

The Reserve Bank of India on Wednesday placed additional restrictions on Paytm Payments Bank Ltd (PPBL) as A report of the external auditors revealed "persistent non-compliances".

In March 2022, PPBL was stopped from onboarding new customers with immediate effect.

On Wednesday, RBI restricted PBBL from taking fresh deposits and credit transactions across its services. An audit report revealed "persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action", the central bank said in a release.

Paytm Payments Bank will not be allowed to take further deposits in any customer accounts after February 29, the RBI said.

It added that no credit transactions will be allowed either, including via wallets. However, the withdrawal or utilisation of balances by its customers will be permitted without restrictions, the central bank said.

In exercise of its powers under section 35A of Banking Regulation Act, 1949 and all other powers enabling it in that behalf, the Reserve Bank of India, has on Wednesday directed PPBL:

"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.

"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, upto their available balance.

"No other banking services 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 February 29, 2024.

"The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated at the earliest, in any case not later than February 29, 2024.

"Settlement of all pipeline transactions and nodal accounts (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."