Paytm Payments Bank had been asked to shut its operations by Feb 29 after non-compliance of regulations.
Paytm Payments Bank has received a small breather with the Reserve Bank of India (RBI) giving the company an extension to wind down its operations. The RBI had asked Paytm Payments Bank to shut its operations by February 29 after persistent non-compliance with regulations and an ongoing money laundering probe into overseas transactions on the platform. The deadline has now been extended to March 15 giving the struggling fintech pioneer more time to forge new partnerships to keep running its business as smoothly as possible.
The move also helps the bank's customers who have been asked to "make alternative arrangements with another bank" before March 15, RBI said in a statement on Friday.
The parent company, Paytm, has taken several measures, including shifting its account to a new bank to ensure seamless merchant settlements. The company has assured customers that Paytm QR codes, soundboxes, and card machines will continue to function even beyond March 15.
For existing Paytm Payments Bank customers, here's a breakdown of how the latest move by RBI will impact various aspects of their banking experience:
Bank Accounts With Paytm Payments Bank
- Customers can continue to use, withdraw, or transfer funds from their accounts until the available balance.
- No fresh deposits will be accepted after March 15, 2024, except for interest, cashbacks, sweep-ins from partner banks, or refunds.
- Customers cannot transfer money into their Paytm Payments Bank account through UPI/IMPS after March 15, but withdrawals are allowed.
- Salary credits will not be accepted after the deadline, and the RBI has advised customers to make alternative arrangements with another bank by mid-March.
- After March 15, 2024, users will not receive subsidies or direct benefit transfers in their Paytm Payments Bank account.
Bill Payments, Wallet And Other Services
- Automatic bill payments will continue until the existing balance in the account runs out, but no further credits or deposits will be allowed after March 15.
- Customers can continue using, withdrawing, or transferring funds from the wallet until the available balance. No top-ups or transfers will be allowed into the wallet after March 15, 2024.
- Existing FASTags can be used to pay tolls using the balance already in the account, but no top-ups will be allowed after March 15.
- Merchants linked to accounts other than Paytm Payments Bank can continue using the existing setup. However, those linked to Paytm Payments Bank for payments can only receive refunds, cashbacks, sweep-ins, or interest after March 15.
The clampdown on Paytm Payments Bank came after authorities found hundreds of accounts on the platform which had been created without proper identification. These accounts with inadequate Know-Your-Customer (KYC) conducted transactions worth crores of rupees on the platform, prompting a money laundering probe.
More than 1,000 users were found to have linked the same Permanent Account Number (PAN) to their accounts. The compliance submitted by the bank was found to be incorrect during verification processes conducted by both the RBI and auditors.