Paytm Bank Faces Trouble as RBI imposes restrictions on the digital payment service provider’s ability to acquire new customers. This decision, announced on Wednesday, restricts Paytm from onboarding any new customers. The RBI’s intervention comes as a result of lapses observed in Paytm’s banking services during an audit of its accounts.
Paytm Bank Faces Trouble as RBI imposes restrictions
The central bank’s action means that Paytm will not be able to enroll new customers into its Payments Bank until further notice. This restriction includes opening new savings accounts, current accounts, prepaid instruments, Fastags, and National Common Mobility Cards (NCMC) accounts for customers. As a consequence, Paytm users will not be able to deposit or top up funds into their wallets, savings accounts, or Fastags after February 29, 2024.
The Reserve Bank of India has taken this step under Section 35A of the Banking Regulation Act, 1949. According to the RBI, this decision aims to address certain irregularities in Paytm Payments Bank’s banking services, ensuring compliance with regulatory norms. Paytm will need to rectify the identified issues and seek RBI approval to resume onboarding new customers.
This move by the RBI could have implications for Paytm’s shareholders, potentially impacting the company’s share performance. Previously, the company’s shares had witnessed a significant upswing, driven by its plans to reduce small postpaid debts. However, the brokerage houses did not favor Paytm’s proposed scheme, leading to a reassessment of the company’s financial estimates.
In conclusion, Paytm faces a challenging situation as it navigates the impact of the RBI’s restrictions, emphasizing the importance of regulatory compliance in the digital payment sector.
