Paytm Payments Bank services to stop next month including wallet, FASTag, etc

The Reserve Bank of India (RBI) on Wednesday announced a ban on Paytm Payments Bank Ltd (PPBL) from accepting deposits or facilitating any credit transactions from late next month. The payment bank will also be blocking top-ups, customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards (NCMC), etc. This stringent step comes after it failed to comply with the directives given by RBI in 2022.

According to a press release dated March 11, 2022, RBI had asked Paytm Payments Bank Ltd to stop onboarding of new customers with immediate effect. However, as per a comprehensive system audit report and compliance validation report of external auditors, the PPBL showed non-compliance, accounting for this supervisory action.

Now, RBI as per section 35A of the Banking Regulations Act, 1949, has directed PPBL that no further deposits or credit transactions will be allowed from February 29. Users will also not be able to top up their account or use prepaid instruments, wallets, FASTags, NCMC cards, and other services from the said date.

“No further deposits or credit transactions or top-ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29,
2024, other than any interest, cashbacks, or refunds which may be credited anytime,” stated the latest press release.

Though new accounts and top-ups are permitted, users who already use PPBL services and have a balance in their savings bank account, current account, prepaid instruments, FASTags, and NCMC will still be able to withdraw their balance after the aforesaid date.

As for those transactions that will still be in the pipeline after Feb 29 will be completed by March 15, 2024, as noted by RBI.

“Settlement of all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024 and no further transactions shall be permitted thereafter.”

“The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services
Ltd. are to be terminated at the earliest, in any case not later than February 29, 2024.”