The Reserve Bank of India (RBI) directed Paytm Payments Bank (PPB) to halt most of its operations by 15 March 2024, following persistent non-compliance and material supervisory concerns. This action was carried out under section 35A of the Banking Regulation Act, 1949.
The RBI barred the PPB from accepting further deposits or conducting credit transactions after 29 February 2024.
The bank could no longer provide various banking services, including fund transfers, beyond the specified date. The nodal accounts of One97 Communications and Paytm Payments Services were terminated by 29 February.
However, customers can still withdraw or utilise balances in their accounts without any restrictions until the available balance is exhausted. The PPB was instructed to settle, by 15 March 2024, all pending transactions and nodal accounts initiated on or before 29 February.
In response, Paytm announced its compliance efforts, as well as plans to expand its relationships with leading third-party banks to distribute payments and financial services products.
The company assured its users that the directive does not impact existing deposits in savings accounts, wallets, FASTags, and National Common Mobility Card accounts, ensuring continued usability of existing balances.
The company said Paytm’s other financial services, such as loan distribution, insurance distribution and equity broking, are expected to remain unaffected by the directive.
Despite the potential financial impact of INR3 billion (USD36 million) to INR5 billion on its annual earnings before interest, taxes, depreciation and amortisation, Paytm expressed optimism about its profitability trajectory. It also clarified that its founder had not taken any margin loans or pledged shares directly or indirectly owned by him, addressing market rumours.
