Introduction:
The shares of Paytm has plunged more than 50% since January this year. The Reserve Bank of India has barred Paytm Payments Bank from accepting any more deposits owing to persistent non -compliances. Since Paytm was working as a bank, it is liable to abide by every RBI regulation relating to it.
However, RBI consistently found many irregularities in the way the Paytm banks was working.
What is Paytm Payments Bank Limited..??
So, what exactly is PTM Payments Bank? PTM Payments Bank or PPBL is an associate of 197 Communications Limited. The majority of shares in the company, which is 51%, are held by Vijay Shekhar Sharma and 197 Communications hold the remaining 49%. The operations of PPBL or PTM Payments Bank Limited started on May 23, 2017. It offered digital banking, including savings account, current account, fixed deposits with partner banks and balance in wallets, UPI and Fastag, among other services.
According to the rules of the Payments Bank, these cannot lend any money and accept deposits only up to Rs. 2 lakhs. The PTM wallet also comes under the embed of PPBL. According to RBI’s provisional data for December 2023, PTM wallet users carried out 247 .2 million transactions worth Rs. 8 ,000 crore for the purchase of goods and services, while 2 .7 million transactions were carried out for transferring over Rs. 5 ,900 crore. Thank you.
What went wrong..??
Now, let’s talk about how will it affect the customers. The customers will not be able to deposit or top up their customer accounts, wallets, fast tags and other instruments after March 15. However, withdrawal or utilization of balances by its customer from the accounts including savings bank account, current accounts, prepaid instruments, fast tags and national common mobility cards are permitted without any restriction up to their available balance.
The Paytm wallet users can continue to carry on transactions till February 29, however after February 29 they will be able to use their existing balance till exhausted and not add any money to their account.
The Reserve Bank of India has extended the restriction on Paytm payments bank until March 15, 2024 from its previous deadline of February 29. Before this extension, Paytm payments bank was not allowed to accept any deposits, top ups or credit transactions in its controlled wallets or accounts. Thank you. As per RBI press release dated February 16, after March 15, 2024, no additional deposits, credit transactions or top -ups will be permitted in customer accounts, prepaid instruments, wallets, fast -tag, national common mobility cards.
However, exemptions include interest cashback sweep -ins from partner banks or refunds which may be credited at any time. Thank you.
How will it affect customers..???
The Paytm Payments Bank came under the lens of RBI for the first time in 2018 when the RBI temporarily halted the opening of new accounts in PPBL owing to violations in licensing conditions and non -compliance with KYC norms or Know Your Customer norms.
Later, in 2021, RBI said it had uncovered the PPBL submitted false information. It was Rs. 1 crore then. Again, on March 11, 2022, RBI barred PPBL from onboarding any new customers with immediate effect.
Paytm Bank, RBI also said that the Paytm Bank should audit their system with the help of an IT team and unless the audit is completed, Paytm should only work with existing customers. Paytm then audited the system and the reports were also sent to RBI. The RBI sent another notice to Paytm on March 31 after witnessing irregularities in the way the bank was functioning. By October 2023, the RBI imposed a penalty of Rs. 5 .39 crore on PPBL for continued non -compliance with KYC norms.
A report by PTI said that PPBL had lakhs of non -KYC compliant accounts and in thousands of cases, single pants were used to open multiple accounts.