The RBI ordered Paytm Payments Bank to stop accepting deposits, credit transactions, and top-ups on customer accounts, prepaid instruments, wallets, and road toll cards after February 29. PPBL’s Paytm Wallet leads digital banking with 24.72 lakh transactions worth over Rs 8,000 crore in December 2023.
Last Monday, the RBI ordered Paytm Payments Bank to stop accepting deposits, credit transactions, and top-ups on customer accounts, prepaid instruments, wallets, or road toll cards after February 29.
Paytm wallet users can use their funds till they’re gone, but they can’t add money after February 29. Paytm wallet top-ups and transactions will stop if the RBI’s position remains.
One97 Communications Limited (OCL) owns 49% of Paytm Payments Bank Limited (PPBL). Vijay Shekhar Sharma owns 51% of the bank. Since May 23, 2017, PPBL has offered digital banking services like savings and current accounts, fixed deposits, wallets, UPI, and FASTag.
Paytm Wallet, part of PPBL, leads the market with 24.72 lakh transactions worth over Rs 8,000 crore in December 2023.
Paytm Payments Bank cannot take deposits or top-ups from February 29 per RBI directive. Customers may withdraw or use their balances till they run out. Paytm Wallet customers can contribute money until February 29 but not after. FASTag, the National Common Mobility Card, and PPBL accounts follow similar regulations.
Mobikwik, PhonePe, SBI, ICICI Bank, HDFC, and Amazon Pay offer wallet services. Over 37 approved banks, including SBI, HDFC, ICICI, IDFC, and Airtel Payments Bank, offer FASTag services.
Non-KYC accounts, one PANs used for many accounts, and transactions exceeding regulatory restrictions in minimum KYC prepaid instruments generated money laundering concerns.
How has Paytm responded?
Users can switch wallets and services, but Paytm management is negotiating with the RBI to comply. Paytm says its non-PPBL financial services like loan distribution, insurance distribution, and equity broking will be unaffected. As usual, offline merchant payment networks will operate.
Paytm’s shares fell 10% on February 5, bringing the drop to over 42% in three sessions. Since the RBI’s payments bank unit restrictions, the stock has fallen from Rs 761.4 to Rs 438.5 as of Monday morning.
Conclusion
The RBI has ordered Paytm Payments Bank to stop accepting deposits, credit transactions, or top-ups on customer accounts, prepaid instruments, wallets, or road toll cards after February 29. PPBL’s Paytm Wallet leads digital banking with 24.72 lakh transactions worth over Rs 8,000 crore in December 2023. PPBL accounts and FASTag and the National Common Mobility Card are affected by the RBI directive. Paytm management is working with the RBI to comply with the regulations, but its non-PPBL financial services will be unaffected. Since RBI restrictions on its payments bank business, Paytm’s shares has dropped 10%.
