RBI stops Paytm Payments Bank from accepting deposits after February 29

The Reserve Bank of India (RBI) on Wednesday prohibited Paytm Payments Bank Ltd from accepting deposits or top-ups in any customer account, prepaid instrument, wallet, or FASTags after February 29, 2024. The Reserve Bank's action against Paytm Payments Bank Ltd (PPBL) follows a comprehensive system audit report and a subsequent compliance validation report from external auditors.

The RBI said in a statement that these audit reports showed long-term non-compliances and material supervisory concerns in the bank, warranting additional supervisory action.

"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," it said.

The central bank also stated that customers will be able to withdraw or use balances from their accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, and National Common Mobility Cards, without restriction, up to the amount of available balance.

In March 2022, the RBI had directed PPBL to stop onboarding new customers with immediate effect.

RBI directs Paytm Payments Bank to stop onboarding new customers with immediate effect

RBI also says, "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,… pic.twitter.com/3UPT10hZ2G

— ANI (@ANI) January 31, 2024

RBI's action against Paytm Payments Bank Ltd under Section 35A of the Banking Regulation Act, 1949: Full document

1. In Press Release dated March 11, 2022, the Reserve Bank of India, in exercise of its powers under section 35A of the Banking Regulation Act, 1949, had directed Paytm Payments Bank Ltd (PPBL or the bank) to stop onboarding of new customers with immediate effect.

2. 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.

3. Accordingly, 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 today directed PPBL as below:

i. 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.

ii. 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.

iii. No other 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 February 29, 2024.

iv. 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.

v. 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.