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The Reserve Bank of India (RBI) has imposed restrictions on Paytm, which effectively bars the platform from onboarding new customer, and limiting the ability of current users for sending or receiving money.
The restriction on Paytm Payments Bank was revealed in an audit report released by the RBI, which said that the action is being taken after “persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action”, and comes into effect February 29th.
From a press release Paytm wallets of all users will be affected, so will be Paytm Fastags and Mobility Cards.
Restrictions imposed by RBI:
Paytm will not be onboarding new users. Which means you will not be able to set up a new account on the platform. As for existing users, they will not be able to use their wallets, Fastags, or Mobility Cards.
Mobility cards are transit cards that can be used for paying for shopping bills, parking fees, ATM withdrawals, metro and bus rides, fuel or food bills.
Paytm will also not be allowed to accept any new deposits after February 29th. Post that day, you will not be able to add any money to the savings account.
The central bank has also said that neither debit nor credit transactions, including those through wallets, will be permitted. However, customers are allowed to withdraw whatever balance they have without any restrictions.
The Reserve Bank of India has also said that after February 29th, the bank should not offer any other services such as fund transfers (regardless of the type of services like AEPS, IMPS, etc.), bill payments, or UPI facilities.
The move is set to clearly targets Paytm’s banking operations, but it does not mention if transactions made via external banks will also be affected. Meaning, you may be able to make UPI payments through Paytm as long as it is connected to an external account.
However, considering Paytm Wallet is powered by Paytm Payments Bank, you may still not be able to use the Wallet.
“The RBI’s move primarily targets Paytm’s banking operations, allowing customers to still utilise Paytm for digital payments as long as their account remains connected to an external bank, even after February 29th,” explains Gaurav Goel, Founder-Director, Fynocrat Technologies.
However, this adds more confusion to the situation considering that UPI is also powered by Paytm Payments Banks, so should that not be affected too post February 29.
This may become clearer when Paytm releases an official statement.
The RBI also requires that all nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd should be terminated at the earliest. This basically suggests that its parent companies and the Payments Bank services will not be able to make any transactions from its own nodal accounts either.
The RBI (Reserve Bank of India) introduced Nodal Accounts as a requirement for intermediaries like aggregators, e-commerce platforms, and payment gateways.
The purpose is to make sure that the payments collected from customers are released to vendors promptly and without any unnecessary delays.
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