RBI has found thousands of ‘Paytm Payments Bank’ accounts that were created without proper identification.
The RBI has shared this information with the country’s financial crime-fighting agency, expressing concerns about potential money laundering activities associated with these accounts.
The Enforcement Directorate, along with the ministries of home affairs and the prime minister’s office, has been informed of the findings by the RBI.
However, Paytm Payments Bank denies any wrongdoing, stating that neither the bank nor its parent company, One 97 Communications Ltd., has been under investigation by the Enforcement Directorate.
RBI Imposes Restrictions on Paytm Payments Bank:
RBI has taken stringent measures, imposing limitations on all services provided by Paytm Payments Bank. These restrictions are set to take effect on February 29, 2024, affecting millions of users across the country.
Under the RBI’s directive, no additional deposits or credit transactions will be allowed after the specified date.
Furthermore, Paytm Payments Bank must cease offering fund transfers, bill payments, and UPI facilities starting March 2024. The regulatory action has been initiated under Section 35A of the Banking Regulations Act, 1949.
Implications for Users:
The impact of these restrictions will be significant for Paytm’s extensive user base, including 330 million wallets, 30 million bank accounts, 1.6 billion UPI transactions per month, and 8 million FASTags linked to Paytm Bank.
As of February 29, users will no longer be able to top up their wallets, prepaid instruments, FASTags, or National Common Mobility Cards.
All account holders are mandated to deplete their balances and terminate their accounts. Following the announcement, Paytm’s share price experienced a 20% decline.
After February 29, UPI payments associated with a Paytm Payments Bank account will be discontinued. However, users with UPI addresses linked to other banks will not be affected.
Paytm Wallet services, relying on Paytm Payments Bank, will face interruptions, with deposits accepted until February 29.
User Onboarding and Deposits:
Starting March 01, Paytm Payments Bank will halt the onboarding of new users, while existing users retain access to online and offline services.
Stock Market and Mutual Fund Services:
Paytm Money, the investment arm of Paytm, assures customers that the recent RBI guidelines will have no impact on their investments in stocks, mutual funds, or NPS. The company operates under SEBI regulation and is fully compliant with regulatory standards.
FASTag and Wallets:
Post February 29, no credit transactions or top-ups will be allowed for FASTags, prepaid instruments, and other Prepaid Payment Instruments (PPI). Existing balances can be used until depleted, but the addition of new funds will be prohibited. Users are advised to obtain new FASTags from alternative issuers, as Paytm shifts its nodal accounts to other commercial banks.