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The Reserve Bank of India (RBI) has taken regulatory action against Paytm Payments Bank Ltd (PPBL) under Section 35A of the Banking Regulation Act, 1949. This follows an earlier directive issued on March 11, 2022, instructing the bank to stop onboarding new customers.
A comprehensive system audit and subsequent compliance validation by external auditors revealed persistent non-compliances and continuing material supervisory concerns. Based on these findings, RBI has issued fresh directions to PPBL.
Under the new directives, the bank will not be allowed to accept any further deposits, credit transactions or top-ups in customer accounts, wallets, FASTags or other prepaid instruments after February 29, 2024, except for interest, cashbacks or refunds. Customers, however, will be allowed to withdraw or use their existing balances without restrictions.
All other banking services, including fund transfers through AEPS, IMPS, UPI and BBPOU, must stop after the same date. RBI has also ordered the closure of nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd by February 29, 2024. Any pending settlements for transactions initiated before this date must be completed by March 15, 2024, after which no further transactions will be permitted.
The action marks a significant escalation in supervisory measures as RBI continues to address compliance and governance issues at the bank.
[RBI]