X: @the_news_21
The Reserve Bank of India (RBI) has issued a directive to Paytm Payments Bank, instructing it to cease accepting further deposits, conducting credit transactions, or facilitating top-ups on any customer accounts, prepaid instruments, wallets, or cards for paying road tolls after February 29. This move has significant implications for Paytm users and the wider digital payment landscape in India.
What is Paytm Payments Bank?
Paytm Payments Bank Limited (PPBL) is a subsidiary of One97 Communications Limited (OCL), with Vijay Shekhar Sharma owning a majority stake. Established in 2017, PPBL offers a range of digital banking services, including savings and current accounts, fixed deposits, wallets, UPI, and FASTag.
Can You Still Use Paytm Services?
While existing Paytm wallet users can continue to utilize their funds until they are depleted, they will not be able to add money to their wallets after February 29. Similarly, PPBL customers will face restrictions on deposits and transactions. This development underscores the importance of exploring alternative digital payment options.
Are There Any Alternatives?
Numerous banks and non-banking entities provide wallet services, including Mobikwik, PhonePe, SBI, ICICI Bank, HDFC, and Amazon Pay. For FASTag services, customers can choose from over 37 authorized banks, such as SBI, HDFC, ICICI, IDFC, and Airtel Payments Bank.
Why Did Paytm Payments Bank Come Under RBI Scrutiny?
The RBI’s action against Paytm Payments Bank was prompted by concerns regarding compliance issues, including non-KYC-compliant accounts, misuse of PANs, and transactions surpassing regulatory limits in minimum KYC prepaid instruments. These issues raised red flags regarding potential money laundering activities.
How Has Paytm Responded?
Paytm management is engaged in discussions with the RBI to ensure compliance with regulatory directives. While services offered by Paytm’s financial arm, unrelated to PPBL, will remain unaffected, the company is working to address the concerns raised by the RBI regarding its payments bank unit.
How Have the Markets Reacted?
Following the RBI’s announcement, Paytm’s stock witnessed a significant decline, triggering lower circuits and experiencing a drop of over 42% in the last three sessions. The stock’s performance reflects investor concerns about the impact of regulatory actions on Paytm’s operations and future prospects.
