New Delhi: The Reserve Bank of India on Wednesday barred Paytm Payments Bank Ltd from accepting deposits or allowing credit transactions, or top-ups, in customer accounts or prepaid instruments - such as wallets and FASTags - linked to those accounts, after February 29.
Customers can, however, continue to utilise balances from their accounts, including savings and current "without restriction (and) up to their available" limit, the Reserve Bank order said.
In addition, the nodal accounts of Paytm's parent company, One97 Communications Ltd., and Paytm Payments Bank Ltd., or PBBL, have been terminated by the central bank.
The RBI's order cited "persistent non-compliances and continued material supervisory concerns in the bank" that were flagged after a comprehensive audit of its systems by external parties.
Neither the company nor its founder/CEO, Vijay Shekhar Sharma, have responded so far.
However, sources have told NDTV the Paytm app will continue to operate as normal, except for those linked to the Paytm Bank. These will only operate till February 29, or till the available balance is exhausted.
All of this follows a March 2022 order in which PBBL was directed to stop taking onboard new customers "with immediate effect".
Essentially the RBI action is against the banking operations of Paytm, meaning customers can continue to use Paytm as a digital payment option so long as their account is linked to an external bank.
In December, One97 Communication laid off hundreds of employees across verticals after it began using AI, or Artificial Intelligence, to automate certain processes in a bid to up cost-cutting.
READ | Paytm Lays Off 100s After Induction Of AI To Cut Costs
The use of AI is meant to reduce costs, improve efficiency of operations, and remove redundant tasks, the firm said.