The Reserve Bank of India has taken a stand against Paytm Payments Bank after it directed the financial institution to no longer onboard new clients over supervisory concerns. In 2022, the RBI directed the bank to employ an Income Tax audit company to behavior a comprehensive System Audit of its IT device over non-compliance issues.

The current-day pass through the RBI comes after the Comprehensive System Audit report and following compliance validation document of the outside auditors discovered persistent non-compliance and guaranteed further motion.

 RBI Restrict Paytm Payments Bank

The RBI stated it had in March 2022 requested the Paytm Payments Bank to stop adding new customers.

However, a Comprehensive System Audit record and subsequent compliance validation report of the outside auditors revealed persistent non-compliance. They persisted material supervisory concerns in the financial institution, warranting similarly supervisory movement, the RBI stated, with out disclosing information. The movement towards Paytm Payments Bank was taken under Section 35A of the Banking Regulation Act, 1949, the vital bank added.

Why RBI has put limits on Paytm transfers

The RBI has exercised its powers under the Banking Regulation Act and has stopped the Paytm Payments Bank from imparting a few services to clients.

• No in addition deposits, credit transactions or top-america can be allowed in any patron money owed, prepaid units, wallets, FASTags, or National Common Mobility Cards after February 29.
• Customers can use the cash in their account for withdrawal, but no similar deposits are allowed. Customers can use the present amount of their FASTags, wallets, savings debts, current bills, and many others.
• The financial institution can not provide services like fund transfers, no matter the character of the provider, that allows you to be now not permitted after February 29. The customers will now not be allowed to use the UPI facility of the financial institution either.
• The nodal debts of One97 Communications Ltd, the parent agency of Paytm, and the Paytm Payments Bank have been terminated by RBI.
• For transactions initiated on or earlier than February 29, all settlements should be concluded by March 15, and no similar transactions are accredited.
• What Paytm Payments Bank Said On RBI Restrictions
• Paytm Payments Bank, a companion of One97 Communications Limited (OCL), stated it is taking “immediate steps” as per RBI’s rules.
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• OCL, as a payments enterprise, works with numerous banks (now not just Paytm Payments Bank), on various payments products, the fintech agency said in a announcement on Thursday.

Conclusion

The Reserve Bank of India (RBI) on Wednesday ordered Paytm Payments Bank to prevent accepting clear deposits in its money owed or popular wallets after February 29, 2024.

Paytm Payments Bank, which is part of considered one of India’s largest payment firms Paytm, was informed by the regulator that it will now not be able to take clean deposits, facilitate credit score transactions, or provide fund transfers, inclusive of Unified Payments Interface (UPI) facility after February 29.