In a significant setback for Paytm Payments Bank, the Reserve Bank of India (RBI’s) issued a directive on Wednesday, prohibiting the bank from providing its fundamental services.
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Impact on Paytm’s Fintech Legacy: RBI Directive and Customer Fallout
Considering Paytm’s substantial customer base, which once symbolized India’s fintech revolution, the recent action may have widespread repercussions for a large number of customers. It is noteworthy that the central bank has granted permission for customers to withdraw or use their balance amounts “without any restrictions, up to their available balance.”
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RBI’s Prohibition on Paytm Payments Bank Services and Nodal Account Termination
The Reserve Bank of India has prohibited Paytm Payments Bank from offering virtually all of its essential services, including accepting deposits or top-ups in customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Card (NCMC), etc., beyond February 29. This action follows “persistent non-compliances and material supervisory concerns.” The RBI’s explicitly stated that no other banking services, such as fund transfers (regardless of the name and nature of services like AEPS, IMPS, etc.), BBPOU, and RBI UPI facility, should be provided by the bank after February 29, 2024. Additionally, the central bank emphasized the termination of nodal accounts belonging to the parent company One97 Communications and Paytm Payments Services, urging their closure no later than February 29.
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