RBI Intensifies Curbs on Paytm Bank

News | Feb 20, 2024

Paytm Payments Bank Restrictions: An Update and Implications for Users

The Reserve Bank of India (RBI) has extended the deadline for certain restrictions on Paytm Payments Bank until March 15, 2024. This move comes as part of the RBI’s ongoing efforts to regulate the fintech space more tightly, ensuring the safety and security of customers’ funds while fostering a healthy financial ecosystem.  Note, the Initial deadline was set for February 29, 2024.

Key Developments

As per the RBI’s directive, Paytm Payments Bank will be barred from accepting new deposits and facilitating credit transactions starting March 15. This decision follows earlier restrictions that significantly affected Paytm’s market valuation.

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Analysts from Bernstein have noted that Paytm’s Wallet and FASTag products will cease to exist following the new deadline. This is a considerable setback for Paytm, which leads the FASTag market and serves over 330 million wallet customers.

In response to the RBI’s orders, Paytm has shifted its nodal account operations to Axis Bank to ensure seamless transaction facilitation for its customers. This move is part of Paytm’s broader strategy to adapt to regulatory changes and maintain its service offerings.

Paytm has updated its FAQ section to clarify the impact of these restrictions on its services. Key points include:

The Paytm app will continue to support bill payments and recharges.

Paytm QR code, Card Machine, and Soundbox services will remain operational, as they are not directly impacted by the Paytm Payment Bank restrictions.

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Users can still use their Paytm Payment Wallet for withdrawals or transfers until the wallet balance is depleted, although no new deposits will be accepted after March 15.

FASTag/NCMC Cards issued by Paytm Payments Bank can be used until March 15, after which recharges or money additions will not be possible.

Bottom Line

The RBI’s stance on Paytm Payments Bank highlight the importance of regulatory compliance and the need for fintech companies to adapt swiftly to changing regulatory landscapes.

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