RBI Bans Paytm Payment Bank? What is Banned & What is Not
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RBI Bans Paytm Payment Bank? What is Banned & What is Not
So has RBI banned Paytm Payment Bank? Is Paytm closing? What about current existing users of Paytm Payment Bank? In this article, we have tried to cover all the possible questions & answers
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Unfortunately, Paytm has a long history of RBI bans, penalties & rejections. On January 31st, 2024 RBI released a press release stating action against Paytm. After the press release, soon followed a storm of panic among Paytm users and investors. We have seen the effect of this on the share market today as Paytm shares have crashed with a 20% lower circuit. So has RBI banned Paytm? Is Paytm Payments Bank closing? What about current existing users of Paytm Payments Bank? In this article, we have tried to cover all the possible questions & answers you might have about the RBI ban on Paytm.
First of all, let us get this clear. If you have an account in Paytm Payments Bank & you are concerned about your funds, don’t worry. You can transfer your funds even after February 29th, 2024 as well. The restriction is laid on deposits or credit of new funds and not on transfer of existing available balance.
Paytm’s parent company One 97 Communications Limited has also decided to expand its existing relationship with other 3rd-party banks to distribute payments.
As of 1st February 2024, Paytm is barred from onboarding new customers. However, for existing users, the Paytm Payments Bank is still available to use as usual until February 29th.
After February 29th, Paytm Payments Bank Limited (PPBL) cannot do further deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, or NCMC cards, etc.
Also Read: Budget 2024-25 Live Updates
You can transfer your available balance from your Paytm Payments Bank account before or after February 29th through UPI, IMPS or any other fund transfer method. The deadline of February 29th is on deposit/credit and not on fund transfer of available balance.
Yes, many people are getting panicked thinking after February 29th, you cannot withdraw your funds from Paytm Payments Bank. However, that’s not true. The date February 29th suggested by RBI is the last date after which customers cannot deposit/credit/add additional funds in their accounts. But, you can still withdraw/debit your funds only up to the available balance.
This applies to savings accounts, current accounts, PI wallets, FASTags, NCMC cards, etc.
Also Read: Difference between UPI, RTGS, IMPS, and NEFT: Charges & Limit
Yes, you can still use the Paytm app after the RBI ban for UPI or fund transfers as long as you are doing the transactions through your linked 3rd-party bank such as SBI, HDFC, Axis, Kotak, ICICI, etc.
Existing Paytm FASTag customers can still use their available balance. However, the addition of new funds is not allowed anymore to Paytm FASTag after February 29th.
RBI banned Paytm from onboarding new customers to Paytm Wallet back in the year 2022. Existing Paytm Wallet customers can use their available balance. However, onboarding new customers to Paytm Wallet is banned currently & the addition of new deposits is not allowed after February 29th. Note that existing Paytm wallet users can still use their available wallet balance.
No, customers can still use Paytm Money after February 29th. "OCL’s other financial services such as loan distribution, insurance distribution and equity broking, are not in any way related to Paytm Payments Bank Limited and are expected to be unaffected by this direction," says Paytm.
Speaking of Paytm Money, you might want to read our latest article on Sovereign Gold Bonds issue date 2024.
Paytm says that the bank is taking immediate steps to comply with RBI’s guidelines. Going forward, “OCL (Paytm’s parent company) will be working only with other banks, and not with Paytm Payments Bank Limited. The next phase of OCL’s journey is to continue to expand its payments and financial services business, only in partnerships with other banks” Said Paytm on February 1st, 2024. So in the coming days, we might get to see Paytm going in the direction of becoming more of a payments & services company with 3rd-party bank partnerships rather than a payments bank itself.
Paytm says that it will continue to offer its services such as Paytm Soundbox, Paytm QR, Paytm Card Machine etc to offline merchants as usual and the “Paytm Payment Gateway business (online merchants) will continue to offer payment solutions to its existing merchants. We offer acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships” the company added further.
But do note, that if you are a merchant (online or offline) who has a Paytm Payment Bank Account where you deposit your funds, the same RBI rules apply to you.
Paytm Payment Bank offers several financial services such as Paytm Loan, Paytm Money (equity broking), Paytm UPI, Paytm QR, Paytm Soundbox, etc. These services will continue to run despite the ban as these services do not come under Paytm Payments Bank Limited. For the quarter ended on December 2023, Paytm has 1.06 Cr subscriptions and has distributed about ₹15,535 Crore loan. Even if Paytm has to say goodbye to its plan of becoming a small bank, it still has built a strong presence in other financial services.
The reason for the RBI ban on Paytm stated in the official press release is “persistent non-compliance and continued material supervisory concerns in the bank.”
No, RBI has not banned Paytm UPI transactions (done through Paytm Gateway & not Paytm Payment Bank) and customers can use Paytm UPI or fund transfer methods like IMPS even after February 29th.
July 2017
RBI cancels Paytm’s Certificate of Authorisation to operate a Payment System. Paytm then transferred its PPI business (Paytm Wallet) to Paytm Payments Bank as permitted by RBI
October 20, 2021
RBI imposes a ₹1 Crore penalty on Paytm Payments Bank for breaking a rule mentioned in Section 26(2) of the Payment and Settlement Systems Act, 2007 (PSS Act). RBI noticed that Paytm Payments Bank Limited (PPBL) had provided incorrect information.
March 11, 2022
RBI releases a press release asking Paytm Payments Bank to stop onboarding new customers right away and appoint an IT audit firm to conduct a comprehensive system audit of the bank’s IT system.
November 6th, 2022
RBI asks Paytm to resubmit its application for (Payment Aggregator) PA license within 120 days and to not onboard new online merchants
October 12, 2023
Reserve Bank of India (RBI) fined PPBL ₹5.39 Crore because the bank did not follow certain rules outlined in the ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016 and allowed IP addresses outside India in its Video-Based Customer Identification Process (V-CIP).
January 31st, 2024
RBI asks PPBL to stop onboarding new customers. Puts a halt on UPI facility, no further deposits, credit transactions, top-ups, wallets, FasTags, NCMC Cards, no fund transfers, after February 29th, 2024.
February 1st, 2024
Paytm released a press release informing its users and investors that the bank is “working on taking immediate steps to comply with RBI directions.” Further adds, “OCL (Paytm’s parent company) to expand its existing relationships with leading third-party banks to distribute payments and financial services products”
So this was all about sharing the latest RBI ban on Paytm from February 29th. Shares of Paytm hit 20% lower circuit of Rs.609 on Thursday’s opening trade, the next day after the RBI press release came out. Earlier in November 2023, Warren Buffett’s Berkshire Hathaway, or BH International, sold its entire 2.46% stake in the company, booking a loss of ₹507 crore on its initial investment.
Later on this month, Softbank entity SVF India Holdings sold another 2% stake in Paytm Payments Bank Limited. The retail investors' share in Paytm’s parent company OCL is on a declining trend. However, the company has presented some positive numbers and growth for the quarter ending in December 2023.
Source: Paytm Investors official website
Thanks to our active dimers @DeciDeaim & @abhishek012 for first sharing this news with us here:
Paytm Payments Bank Can't Offer Services Including Wallet After 29 Feb 2024
Paytm now tieup with 3rd party banks to continue Paytm Payment Gateway business
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Bye bye to Chinese investment. 😄😄😄
अब तो समझ जाइए आदरणीय मित्रों।
🤣
Continued material supervisory concerns: This indicates that the supervisory authority, in this case, the Reserve Bank of India, has ongoing significant concerns about the bank's operations, management, financial health, or other critical aspects that fall under its regulatory oversight. These concerns are described as "material," meaning they are substantial and have the potential to significantly impact the bank's operations or the broader financial system.
Hope this helps out @amc2
too much by a hypocrite institution.....
😀. Milked the most when india was moving towards cashless. I had doubts right from its valuation and its offered price of stocks etc.
I remember commenting on one post in DD, freedom phone and paytm look alike , just that their melting points differ.
One sided story RBI kaun sa doodh ka dhula hai, investors ka paisa doobe ya kuchh aur, ye achanak ban bahut galat hai RBI ko boolna tha ki correct everything within one year on withing six months else all mentioned restrictions will be imposed,but rather they continued and suddenly banned everything and destroyed innocent shareholders money in no time, ye log daaru ka peg laga kar achanak kuchh bhi bol dete hai 8 pm pe, at least correct Karne ka time Dena tha shareholders ko warning ke saath
nothing is one sided Drupal. This ban on PPBL is not achanak (all of a sudden). Paytm has been receiving these heads-ups from RBI for many years.
KYC has been a long-due problem in Paytm (1 Pan card being linked to 1000s of accounts),
ED is probing money laundering too & some possible Chinese links because Paytm did have Alibaba Grp etc as its major Chinese investors..now I think the chinese funding is reduced but its still there with Ant Fin
Paytm IPO has made several retail investors lose their money,
now RBI has also banned their nodal account so its a concern for merchants/businesses also how their QR/Soundbox etc will work
Paytm IPO is considered one of the worst-performing IPOs in Indian history. Any mindful retail investor who does thorough research before investing would have mitigated the risk of keeping Paytm in their portfolio (in my opinion)
I am not taking side of RBI. I as a user / merchant / retail investor just expected better from Paytm, a multi-million dollar fintech pioneer of our country.
Banning Paytm is betrayal of trust by RBI ye ek hi public ka favourite bank tha easy to operate for everyone
https://www.linkedin.com/posts/ca-kunal-kedia-f...
@kediakunal991 how to read without login
Not defending, but RBI is too much double faced(hybrid) in compliance orders when PSU Banks are there...these orders are for only private players.. public sector banks/units are not touched...
RBI could have taken control of operations or given control via appointed officers to manage the operations.. but they tied and broke the spine of FinTech...
You'll are saying several notices were issued and so on... what this institution was doing? Sipping a cup of Bitter Gourd Soup and sending notices...
Rules are made for weaker and newbies... P.S: NPA increasing day by day and taking a cigar in wrecking Titanic and people are saying, oh wow ! what a scene ! trillion trillion trillion... without finance ministry approval, this wasn't done.. they're messing up with backdated GST collections killing several companies, first they did with Crypto, then gaming, then ecommerce.. they're partially undemocratic and authoritarian.
PS2(for poster): you're author, you should keep pros and cons.. but you did with pros, keeping the side of RBI..you should have added concs what happens with investors and this sector . VD: repost as you failed to protect and put other side. A complete one-sided post.
PS3: a child doing mischief doesn't mean they should get capital punishment but it's your incompetence...you nourished and saying my child is deficient with irregularities.. what were you doing those all times? babu, Shona, don't do, don't do.. I'll beat you..hunhhh, you should have participated in the daily activities.. but you don't want because this your step-child.. (rant)
I too feel that this is copied, and just pasted in a different format, even this post is repetitive, same thing is getting repeated again n again.
No offense.
I am not posting these articles for a few dimes or something else. I post articles because this is my profession (and because I genuinely wish to provide value to the users of this platform). When you are doing what your profession is & you love it to the core (and I have been doing it since last 3 years+) you do not blink an eye for copy-pasting because you don't need to.
Show me another article please which has the same exact content as above? If not, then these remarks simply have no grounds and are getting personal.
I too feel that this is copied, and just pasted in a different format, even this post is repetitive, same thing is getting repeated again n again.
No offense.
Guys, let's stick this discussion to what is relevant to the main topic & its discussion.
Do note this is news section, a news remains same no matter where you are reading it. Its just some perspective is added by some and some adds their own views. Doesnt mean content is copied (if it was then we might have already received notice).
So lets appreciate what our friend @Vrushali.S has covered here, content is not copied, its compiled with various resources and written in own language to help community members.
cc @quantum