Paytm Payments Bank, a leading payment firm in India, has been instructed by the Reserve Bank of India (RBI) to halt the acceptance of new deposits in its accounts and popular wallets after February 29, 2024. The regulator has also prohibited the bank from facilitating credit transactions, offering fund transfers, including Unified Payments Interface (UPI) facility, and any further top-ups or credit transactions in customer accounts. However, customers will still be allowed to withdraw or utilize their balances without restrictions. The RBI’s decision comes after persistent non-compliances and material supervisory concerns were identified in a Comprehensive System Audit report and subsequent compliance validation report. Paytm Payments Bank, an associate of One 97 Communications Limited (OCL), has stated that it will take immediate steps to comply with the RBI’s directions. The fintech company plans to expand its partnerships with other banks to distribute payments and financial services products. Paytm expects a potential impact of Rs 300 crore to Rs 500 crore on its annual earnings due to the RBI’s restrictions, but remains optimistic about improving its profitability.
RBI has imposed restrictions on Paytm Payments Bank due to regulatory compliance concerns. The bank has been found violating the rules on opening new accounts and KYC norms. Additionally, there were lapses in the due diligence process while onboarding customers. These restrictions aim to ensure that the bank rectifies these issues and follows the necessary guidelines to safeguard customer interests. RBI’s decision highlights the importance of adhering to regulatory norms in the banking sector.
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Reasons for RBI’s Restrictions on Paytm Payments Bank
The RBI has imposed restrictions on Paytm Payments Bank due to regulatory concerns.
