Skip to main content

Explained: How RBI ban on Paytm impacts you and your finances from 1 March

By

 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.

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more