The Reserve Bank of India (RBI) has taken significant regulatory action against Paytm Payments Bank Limited (PPBL). Effective from February 29, 2024, the RBI has directed PPBL to cease accepting deposits or top-ups in any customer account, including wallets and FASTags. This decision was based on a history of “persistent non-compliance” and ongoing material supervisory concerns at the bank, as revealed by a compliance validation report from external auditors.
Consequently, PPBL will no longer be able to offer additional banking services beyond withdrawals and account utilization from this date. This includes discontinuing services such as fund transfers and UPI facilities. The RBI has allowed exceptions for interest, cashbacks, or refunds to be credited to accounts at any time. Customers of PPBL can still withdraw or use the balances from their accounts, but no further transactions will be permitted beyond the settlement deadline of March 15, 2024, for all pipeline transactions and nodal accounts.
This crackdown by the RBI has led to significant reactions and concerns within the business and startup community. Many have expressed shock and disbelief at the stringent nature of the RBI’s action, and there’s widespread concern about its impact on the fintech sector and Paytm’s future prospects. Some industry leaders and entrepreneurs have voiced their support for Paytm and its CEO, emphasizing the difficult situation this creates for the company and its customers.