The Reserve Bank of India (RBI) has prohibited Paytm Payments Bank Limited (PPBL) from onboarding new customers and accepting deposits or top ups in any account, including wallets and FASTags. The RBI order will be effective from February 29 onwards.
The RBI has also terminated the nodal accounts of One97 Communications Ltd., the parent company of Paytm, and Paytm Payments Bank Ltd.
In its directive issued to the Paytm, the Reserve Bank, however, said that existing customers will continue to utilise the amount already deposited in their accounts from their “without restriction (and) up to their available limit.”
The RBI crackdown on Paytm Payments Bank came after “persistent non-compliances and continued material supervisory concerns in the bank”.
The irregularities were reportedly flagged after a comprehensive audit of the digital bank’s systems through external parties.
The RBI has only prohibited the banking operations of the Paytm and not the digital payment options. Paytm customers will continue to use the UPI transfer services as long as an external bank account is linked to their Paytm account.
So far, the company has not responded to the RBI action.
Earlier in December last year, Paytm’s parent company One97 Communication had laid off several employees as part of cost-cutting measures.
The lay offs were announced after the company adopted Artificial Intelligence (AI) in several areas of its working process.