Understanding Paytm's Move: Nodal Account Transfer to Axis Bank

Paytm, a financial services company, has transferred its nodal account to Axis Bank to maintain seamless merchant settlements, complying with RBI's directive. This move comes after RBI terminates Paytm's previous nodal accounts due to non-compliance issues. Paytm assures continued operations for its vast user and merchant base.

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Paytm, a leading financial services company, has announced the transfer of its nodal account management to Axis Bank, ensuring uninterrupted merchant settlements. Previously managed by Paytm Payments Bank Ltd (PPBL), this strategic shift aligns with regulatory guidelines and aims to mitigate disruptions in merchant transactions.

The decision follows the Reserve Bank of India's (RBI) directive to terminate the nodal accounts of One 97 Communications Limited (OCL) and Paytm Payment Services Ltd (PPSL) due to compliance issues and supervisory concerns. PPSL, a subsidiary of OCL, has utilized Axis Bank's services since its establishment.

A Paytm spokesperson emphasized, "The transition to Axis Bank's nodal account, facilitated through an Escrow Account, reaffirms our commitment to seamless merchant settlements. We remain dedicated to empowering Indians and fostering financial inclusion."

Under RBI regulations, intermediaries handling online payments must utilize nodal accounts for fund collection and expedite payments to sellers. These accounts, governed by RBI guidelines, serve as conduits for funds from banks to designated merchants.

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In India, an escrow account, synonymous with security for transactional funds, plays a crucial role in financial transactions. RBI mandates timely and transparent migration of escrow accounts, ensuring minimal disruption to payment cycles and adherence to regulatory standards.

RBI stipulates that the escrow account balance must cover outstanding prepaid payment instruments (PPIs) and merchant payments exclusively. Paytm's nodal account transition is poised to sustain digital payments via its QR code and card machine platforms, benefiting its extensive user and merchant network.

With over 300 million users and one million active merchants, Paytm reassures stakeholders of continued service availability post-transition. Its commitment to operational excellence underscores its pivotal role in India's digital payments landscape.