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RBI Mulls Cancelling Paytm Payments Bank’s License – What You Need to Know.

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  • by News Desk
  • 7 min read
  • 2024-02-07 10:49:32.000Z

The RBI had instructed the Paytm Payments Bank to settle all outstanding transactions and nodal accounts by March 15, stipulating that no further transactions would be permitted beyond this date

 

The Reserve Bank of India (RBI) is considering the revocation of the authorization of Paytm Payments Bank, which is facing a financial predicament, as per insiders at the RBI who have divulged details to Moneycontrol. The deadline for concluding business activities and settling transactions, slated for March 15, seems to be the pivotal factor driving this determination, according to the report.

 

Speaking on conditions of anonymity, an informant disclosed to Moneycontrol, “That is the current objective,” indicating the escalating concerns regarding the future of Paytm’s banking arm.

 

The RBI had directed the payments bank to settle all pending transactions and administrative accounts by March 15, specifying that no further transactions would be entertained beyond this date. The potential decision to annul the license arises from recurrent issues of non-compliance, prompting the RBI to impose significant operational restrictions on the Payments Bank, effectively suspending its functions by February 29.

 

A final decision regarding the license annulment is anticipated to be reached in the upcoming days, as per the sources.

 

Recent developments suggest efforts by the management of Paytm to address the crisis. Vijay Shekhar Sharma, the promoter and CEO of Paytm, reportedly held discussions with Finance Minister Nirmala Sitharaman on February 6. Furthermore, senior executives from Paytm engaged in dialogues with high-ranking officials at the RBI.

 

Previously, the RBI had imposed stringent operational limitations on Paytm Payments Bank, forbidding the acceptance of new deposits and credit transactions after February 29. This decision followed a Comprehensive System Audit report, along with subsequent reports validating compliance, which highlighted persistent breaches and significant supervisory concerns within the bank, necessitating further regulatory measures.

 

Starting February 29, customers will no longer be able to make additional deposits, credit transactions, or top-ups in various accounts and instruments such as prepaid instruments, wallets, FASTags, NCMC cards, etc. However, customers can continue to withdraw funds or use their account balances, including those in savings and current accounts, until the balance is exhausted.

Since March 11, 2023, the RBI had prohibited Paytm Payments Bank from acquiring new customers.

 

On February 6, the stock of One97 Communications, the parent company of Paytm, closed at Rs 463 on the NSE, marking a 2.63 per cent increase after experiencing a decline of over 40 per cent in the preceding three sessions.

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