Paytm Bank Gets More Time to Wrap Up Operations: How It Affects Customers

Paytm Bank Gets More Time to Wrap Up Operations: How It Affects Customers

Paytm Payments Bank (PPBL), the digital banking arm of Paytm, has been granted an extension by the Reserve Bank of India (RBI) to wind down its operations by March 15, 2024. The RBI had earlier ordered PPBL to stop offering any services, including deposits, wallets, FASTags, and new customer sign-ups, after February 29, 2024, due to repeated violations of regulatory norms and a money laundering probe.

Paytm Payments Bank had been asked to shut its operations by Feb 29 after non-compliance of regulations.

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The extension gives PPBL more time to find new partners and ensure smooth business continuity. It also gives some relief to the existing customers, who have been advised by the RBI to switch to another bank before the deadline. PPBL has assured its customers that their money is safe and that they can continue to use Paytm QR codes, soundboxes, and card machines.

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Here are some key points to know about how the RBI’s action will impact different aspects of PPBL’s banking services:

  • Bank Accounts: Customers can use, withdraw, or transfer funds from their accounts until the balance is exhausted. No new deposits will be accepted after March 15, 2024, except for interest, cashbacks, sweep-ins from partner banks, or refunds. Customers cannot transfer money into their PPBL account through UPI/IMPS after March 15, but withdrawals are allowed. Salary credits, subsidies, and direct benefit transfers will not be accepted after the deadline, and customers have to make alternative arrangements with another bank.
  • Bill Payments, Wallet, and Other Services: Automatic bill payments will continue until the balance in the account runs out, but no further credits or deposits will be allowed after March 15. Customers can use, withdraw, or transfer funds from the wallet until the balance is exhausted. No top-ups or transfers will be allowed into the wallet after March 15, 2024. Existing FASTags can be used to pay tolls using the balance already in the account, but no top-ups will be allowed after March 15. Merchants linked to accounts other than PPBL can continue using the existing setup. However, those linked to PPBL for payments can only receive refunds, cashbacks, sweep-ins, or interest after March 15.
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The RBI’s action against PPBL is based on the gravity of the violation and the best interest of systemic stability and customer protection, according to RBI Governor Shaktikanta Das. PPBL had been found to have created hundreds of accounts without proper identification, leading to fears of potential money laundering. More than 1,000 users were found to have linked the same PAN to their accounts. The compliance submitted by the bank was found to be incorrect during verification processes conducted by both the RBI and auditors. PPBL had been directed to stop taking onboard new customers in March 2022. The RBI will issue a FAQ by next week to address the queries from the public.

Source : NDTV

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