New Delhi, 17 February : The Reserve Bank of India (RBI) has granted Paytm Payments Bank a brief respite, allowing the company to continue its operations until March 15. Previously, the RBI had directed Paytm Payments Bank to cease operations by February 29 due to persistent regulatory non-compliance and an ongoing investigation into money laundering related to overseas transactions on its platform. However, the deadline has now been extended, offering the struggling fintech company additional time to establish new partnerships and address regulatory concerns.
This extension also benefits the bank’s customers, who have been advised by the RBI to arrange alternative banking services before March 15. In a statement issued on Friday, the RBI emphasized the importance of customers transitioning to another bank.
Paytm, the parent company, has taken several measures to ensure smooth merchant settlements, including transferring its accounts to a new bank. The company has reassured customers that Paytm QR codes, soundboxes, and card machines will remain operational even after March 15.
For existing customers of Paytm Payments Bank, here’s how the RBI’s latest decision will affect various aspects of their banking experience:
Bank Accounts with Paytm Payments Bank:
– Customers can continue to use, withdraw, or transfer funds from their accounts until the available balance is exhausted.
– After March 15, 2024, no fresh deposits will be accepted, except for interest, cashbacks, sweep-ins from partner banks, or refunds.
– Transfers into Paytm Payments Bank accounts via UPI/IMPS will not be permitted after March 15, although withdrawals are still allowed.
– Salary credits will cease after the deadline, and customers are advised to make alternative arrangements by mid-March.
– Subsidies or direct benefit transfers will no longer be received in Paytm Payments Bank accounts after March 15, 2024.
Bill Payments, Wallet, and Other Services:
– Automatic bill payments will continue until the existing balance is depleted, but no further credits or deposits will be accepted after March 15.
– Customers can use, withdraw, or transfer funds from their wallets until the available balance is exhausted, with no top-ups or transfers permitted after March 15, 2024.
– Existing FASTags can still be used for toll payments using the existing balance, but no top-ups will be allowed after March 15.
– Merchants linked to accounts other than Paytm Payments Bank can maintain their existing setups. However, those linked to Paytm Payments Bank for payments will only receive refunds, cashbacks, sweep-ins, or interest after March 15.
The crackdown on Paytm Payments Bank followed the discovery of numerous accounts on the platform with insufficient identification. These accounts, lacking proper Know-Your-Customer (KYC) procedures, were involved in transactions worth millions of rupees, leading to a money laundering investigation.
In conclusion, the extension granted by the RBI provides temporary relief for Paytm Payments Bank and its customers, but it also underscores the importance of adhering to regulatory standards to maintain trust and stability in the financial system.
