RBI Prohibits Paytm Payments Bank Services, Customers Face Transaction Halt

The RBI has barred Paytm Payments Bank from accepting deposits or top-ups after February 29, 2024, citing persistent non-compliance. Customers can withdraw funds but won't be able to make new transactions. This comes after a comprehensive audit revealed ongoing supervisory concerns and non-compliance issues. 

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In a significant move, the Reserve Bank of India (RBI) has decided to take strict action against Paytm Payments Bank Ltd (PPBL). As of February 29, 2024, PPBL will no longer be permitted to accept deposits or top-ups in various customer accounts and services, including prepaid instruments, wallets, FASTags, and NCMC cards.

The RBI's decision stems from a meticulous system audit report and a subsequent compliance validation report conducted by external auditors. These reports highlighted persistent non-compliance and ongoing material supervisory concerns within the operations of Paytm Payments Bank.

According to the RBI statement, effective February 29, 2024, no new deposits, credit transactions, or top-ups will be allowed in any customer accounts, prepaid instruments, wallets, FASTags, or NCMC cards, among others. This stringent measure is deemed necessary due to the identified compliance issues and supervisory concerns.

"No further deposits or credit transactions or top-ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashback, or refunds which may be credited anytime," stated the RBI.

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However, customers are not entirely restricted, as they are still permitted to withdraw or utilize balances from their various accounts, including savings bank accounts, current accounts, prepaid instruments, FASTags, and National Common Mobility Cards, up to their available balance.

It's worth noting that this isn't the first time the RBI has intervened with PPBL. In March 2022, the central bank directed the payments bank to halt onboarding new customers immediately. The recent action suggests a continuous monitoring and intervention process by the regulatory authority to ensure compliance and the smooth functioning of financial institutions.