Paytm Payments Bank’s business unaffected by RBI curbs, report says

Paytm Payments Bank’s business unaffected by RBI curbs, report says

According to a report by Business Standard, the Reserve Bank of India’s (RBI) recent restrictions on Paytm Payments Bank will not have a major impact on its payments business, as most of its users have linked their accounts with other banks. The report cites data from banking industry sources that show that out of around 90 million Paytm UPI app users, only 15 million are exclusive to Paytm UPI app, while the rest have also installed other UPI apps.

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The RBI had barred Paytm Payments Bank from accepting new deposits or conducting credit transactions after February 29, following an audit that revealed several violations of regulatory norms. The RBI had also imposed a similar ban on the bank in March 2023, which was lifted after six months.

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The report suggests that the RBI’s action will not affect Paytm Payments Bank’s core business of facilitating payments, as 90 percent of its UPI users have accounts with other banks, and can use multiple backend accounts for transactions. However, the report also notes that the RBI’s action could hamper the bank’s lending business, which accounts for about 20 percent of its revenues, if its lending partners limit their exposure due to operational or governance risks. The report also says that the bank’s wallet and FASTag businesses may need to be wound down, as they rely on deposits and top-ups.

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Source : Budget 2024

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