RBI bars Paytm from taking deposits, offer other services after February 29

The Reserve Bank of India has barred Paytm Payments Bank from accepting deposits or top-ups in any of its key products — customer accounts, prepaid instruments, wallets, FASTags and National Common Mobility Card (NCMC) among others — after February 29.

This means that the RBI decision essentially bars Paytm Payments Bank from offering all its core services — including accounts and wallets — from March. This decision comes in the wake of “persistent non-compliances and material supervisory concerns”.

The central bank has directed that the nodal accounts of the parent company One97 Communications and Paytm Payments Services should be terminated at the earliest, and not later than February 29.

The settlement of all pipeline transactions and nodal accounts — in respect of all transactions initiated on or before February 29 — should be completed by March 15, and no transactions shall be permitted thereafter, the central bank has said.

The action is technically not a cancellation of the licence of Paytm Payments Bank; however it constricts the company’s operations to a very large extent.

The central bank has allowed the withdrawal or utilisation of balance amounts by customers “without any restrictions, up to their available balance”.

Paytm, which is credited with revolutionizing India’s fintech revolution, has a significant customer base. On its website, Paytm Payments Bank claims it has more than 100 million know your customer (KYC) verified customers, and is also the largest issuer of FASTag with over 8 million FASTag units issued.