RBI explains why it took action against Paytm Payments Bank and what it means for customers

RBI explains why it took action against Paytm Payments Bank and what it means for customers

The Reserve Bank of India (RBI) has issued a Frequently Asked Questions (FAQ) document to clarify the reasons and implications of its action against Paytm Payments Bank Ltd (PPBL) under the Banking Regulation Act, 1949. The RBI had imposed several business restrictions on PPBL on January 31, 2024, after finding persistent non-compliances and material supervisory concerns in the bank.

paytm

Canada Virtual Immigration Fair 2024

According to the FAQ, the RBI had directed PPBL to stop onboarding new customers with immediate effect on March 11, 2022, and had conducted a comprehensive system audit of the bank. The audit report and the subsequent compliance validation report revealed that PPBL had failed to adhere to the regulatory norms and directions issued by the RBI, warranting further supervisory action.

Gold Prices Remain Steady

The RBI has directed PPBL to stop accepting any deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, etc. after March 15, 2024, except for interest, cashbacks, sweep in from partner banks or refunds. The bank has also been barred from providing any banking services, other than allowing customers to withdraw or utilise their balances, after March 15, 2024. The bank has been asked to terminate the nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd by February 29, 2024, and settle all pipeline transactions by March 15, 2024.

The RBI has assured the customers of PPBL that their deposits and balances are safe and that they can withdraw or use them without any restrictions. The RBI has also advised the customers to make alternative arrangements for their banking needs before March 15, 2024, as PPBL will not be able to offer any fund transfers, BBPOU and UPI facility after that date.

Tata Punch EV Introduced in India

The RBI has said that the action against PPBL is based on the provisions of Section 35A of the Banking Regulation Act, 1949, which empowers the RBI to issue directions to banks in the interest of banking policy, public interest, depositors, or the banking system. The RBI has also said that the action is not a cancellation of PPBL’s licence or a moratorium on its operations, and that it is open to reviewing the action based on the future compliance and performance of the bank. 

Source : Budget 2024

You May Also Like

More From Author

+ There are no comments

Add yours