Will Paytm stop working after February 29? What RBI said, what it means for you, the whole story in 5 points

The Reserve Bank of India (RBI) has imposed a slew of restrictions on Paytm Payments Bank from February 29 following alleged “persistent non-compliance”. The restrictions affect new deposits and credit transactions on the platforms. The new rule may also not allow new users to create an account on the platform. As per the first press release on the matter, all users' Paytm wallets will be affected, as will Paytm fatags and mobility cards. But what does that mean for you? Here is the story in five points:

Restrictions imposed by RBI on Paytm Payments Bank: History in 5 points

– After February 29, Paytm Payments Bank will not accept new users. This means that if you are not a Paytm user yet, you will not be able to create a new account on the platform after the mentioned date. Existing users cannot use their Paytm Wallets, Paytm Fatags or Mobility Cards. Mobility cards are essentially transit cards that can be used to pay shopping bills, parking fees, ATM withdrawals, subway and bus rides, fuel or grocery bills, and more.

–Paytm will also not be allowed to accept new deposits after February 29th. Whatever money you want to add to your Paytm Payment?s bank, you can only do so until the last day of February. Publish this day, you It is not possible to deposit money into the savings account.

– The central bank has also stated that neither debit nor credit transactions, including through wallets, will be allowed. However, customers can withdraw without restrictions, the announcement said. Basically, you will not be able to receive or send money from your account, but the balance you have in your Paytm account will allow you to access and withdraw that money.

“No further deposits or credit transactions or recharges will be permitted on customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, except for interest, cashbacks or refunds which may be credited at any time.” “

– The Reserve Bank of India has also stated that the bank should not provide any other services such as money transfers (irrespective of the type of services like AEPS, IMPS etc.), bill payments or UPI facilities after February 29. This means that you will not be able to make any money transfers, bill payments or UPI transactions through Paytm services after the mentioned date.

– To be clear, the move targets Paytm’s banking operations, but there is no mention of whether transactions through external banks will also be affected. This means you may be able to make UPI payments through Paytm as long as it is linked to an external account. However, since Paytm Wallet is operated by Paytm Payments Bank, you still may not be able to use Paytm Wallet. “RBI's move primarily targets Paytm's banking operations and allows customers to continue using Paytm for digital payments even after February 29 as long as their account remains linked to an external bank,” explains Gaurav Goel, Founder and Director of Fynocrat Technologies.

However, this creates a bit more confusion considering that UPI is also operated by Paytm Payments Banks, so after February 29, this shouldn't also be affected. This could become clearer when Paytm releases an official statement. We also reached out to Paytm to understand this better. We will update this space as soon as we hear from you.

As per Paytm app, both Paytm Wallet and Paytm UPI services are operated by Paytm Payments Bank.

The RBI also requires that all node accounts of One97 Communications Ltd and Paytm Payments Services Ltd be terminated at the earliest. This basically suggests that Paytm's parent company and Payments Bank services are also unable to transact from their own node accounts. The RBI (Reserve Bank of India) has introduced nodal accounts as a requirement for intermediaries such as aggregators, e-commerce platforms and payment gateways. The aim is to ensure that payments collected from customers are forwarded to suppliers promptly and without unnecessary delays.

The restriction on Paytm Payments Bank was revealed in an audit report released by the RBI, which said the action is being taken following “ongoing violations and ongoing material regulatory concerns in the bank that warrant further regulatory action.” For the uninitiated, Paytm Payments Bank or PPBL is a digital banking service that offers banking services and savings account options. Founded in 2017, it is an extension of Paytm. PPBL received approval from the Reserve Bank of India (RBI) to function as a payments bank and has officially offered its services since November 2017.

Published by:

Nandini Yadav

Published on:

January 31, 2024