RBI curbs to render Paytm wallet and FASTag inoperative

Nodal accounts of Paytm parent One97 Communications, Paytm Payment Services to be terminated; customers can still withdraw or use available balances in their accounts, including wallets, FASTags

January 31, 2024 05:45 pm | Updated February 01, 2024 06:30 am IST - Mumbai

The interface of payments app Paytm.

The interface of payments app Paytm. | Photo Credit: REUTERS

The Reserve Bank of India (RBI) imposed additional curbs on Paytm Payments Bank Ltd (PPBL) on Wednesday, prohibiting it from operating its mobile wallet after February.

It has also been barred from taking further deposits or undertaking credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, or National Common Mobility Cards, after February 29.

However, it will be allowed to credit any interest, cashbacks, or refunds into these accounts at any time, and customers are also free to withdraw or use their balances in these accounts without restrictions.

According to sources, the RBI’s action will not impact the usage of the UPI channel used through the Paytm app, as this is owned by the parent company and not by PPBL.

Paytm, which is promoted by the Vijay Shekhar Sharma-led One97 Communications Ltd, did not respond to a query as to what operations could continue in the organisation.

‘Persistent non-compliances’

The RBI has initiated action against Paytm following a comprehensive system audit report and subsequent compliance validation report by external auditors, which revealed “persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action”, the central bank said in a circular.

The RBI had, on March 11, 2022, directed PPBL to stop onboarding new customers with immediate effect. However, it was found that the bank was continuing to onboard customers through an offline mode in violation of the RBI directive, necessitating further action.

As per the RBI’s fresh directive, the bank’s customers can withdraw or use the available balance amounts in their accounts without any restrictions, including their savings bank accounts, current accounts, prepaid instruments, FASTags, and National Common Mobility Cards.

Nodal accounts to be closed

“No other banking services, other than those referred above, like fund transfers (irrespective of name and nature of services like AEPS, IMPS), BBPOU and UPI facility would be provided by the bank after February 29, 2024,” the RBI said.

The nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd must also be terminated by February 29. PPBL has been asked to settle all pipeline transactions and nodal accounts by March 15, with respect to all transactions initiated on or before February 29. No further transactions will be permitted thereafter.

As per the RBI directive, if the Paytm app and / or the wallet of the remitter is linked to an account maintained with Paytm Payments Bank, then remitter can continue to use the app to withdraw or transfer funds from his wallet or account at any time, without any restriction.

If the Paytm app and / or the wallet of the beneficiary is linked to an account maintained with Paytm Payments Bank then the beneficiary can continue to receive the credits up to February 29. Thereafter, the beneficiary can only withdraw or transfer funds from his wallet or account. No credits or top ups into Paytm Payments Bank account or wallet are allowed from March 1.

The RBI’s action of prohibiting any further credits or top ups into Paytm Payments Bank account or wallet, will take effect after February 29, 2024(i.e. from March 1, 2024 onwards) and it does not come int effect immediately.

As per the order the balance available in the Prepaid instruments, FASTag, NCMC transit cards, issued by the bank can be used, withdrawn or transferred, as the case may be, without any restrictions. However, any top up or further credits into these accounts are allowed only upto February 29.

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