Starting from February 29, Paytm Payments Bank won't be able to accept new users. If you're not already using Paytm, you can't create a new account after this date. Existing users won't be able to use Paytm wallets, Fastags, or Mobility Cards after this date. This is because the Reserve Bank of India has barred the listed fintech’s payment bank from offering banking services after February. The action against One 97 Communications, the parent company that runs Paytm, is due to “non-compliance and continued material supervisory concerns in the bank,” RBI said. Paytm Payments Bank Ltd (PPBL) is an associate company of PAYTM and has over 100 million KYC customers. It also has 300 million wallet users, 30 million bank account holders and a 17 per cent market share in FASTag by value.While the regulator had earlier banned new customer on-boarding at PPBL, the latest actions prohibit Paytm from undertaking any credit or deposit transaction after 29 February, 2024. The central bank has frozen all basic transaction services through Paytm Payments Bank’s various platforms using Unified Payments Interface (UPI), IMPS, Aadhaar-enabled payments, and others, effective February 29.
The regulator has banned Paytm from providing other banking services such as transfer of funds, Aadhaar Enabled Payment System, Immediate Payment Service, Bharat Bill Payment Operating Unit, and the UPI?facility. Moreover, no further deposits or credit transactions or top-ups will be allowed in customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Card cards, etc, after February 29, other than any interest, cashback, or refunds that may be credited any time. Mobility Cards work for various payments like shopping, parking, ATM withdrawals, metro and bus rides, fuel, and food bills. According to the announcement, customers can freely withdraw funds without any limitations. Although you won't be able to receive or send money from your account, you can still access and withdraw the remaining balance in your Paytm account. "RBI’s present directions to PPBL essentially means a stop to PPBL’s core and popular services like Paytm Wallet, Paytm UPI, and Bill Payment Services (for Mobiles, Electricity, DTH) etc. with effect from 29.02.2024 and PPBL will only be able to provide merchant services on its app from 01.03.2024," said Priya Dhankhar, Senior Associate, SKV law offices
This RBI move will effectively force account holders to liquidate their balance and shut accounts. Merchants will also be forced to move out of Paytm and opt for other UPI players. Impact in a nutshell: "For customers, services will be normal till February 29 and after that, they will not be able to make deposits or credit transactions or top-ups on their accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. After February 29, once the restrictions kick in, users will be able to withdraw and use their money in their accounts, FASTag service, etc. up to the balance available in their bank accounts," said Mehak Khanna, partner, Khaitan and Khaitan.
-Business Standard 01st Feb, 2024.
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