You Won’t Be Able To Make Paytm Transactions After February 29: Here’s Why

Reserve Bank of India has banned the Paytm Payments Bank from conducting most business from March 2024. In a press release dated January 31, 2024, the central banking authority highlighted all the changes that will occur in the coming days.

Here’s What The RBI Press Release Mentions

Per the official release by the Reserve Bank of India, the Comprehensive System Audit report and the subsequent compliance validation report of the external auditors “revealed persistent non-compliances and continued material supervisory concerns in the bank.” Hence, the regulatory authority has put the following restrictions on Paytm Payments Bank Ltd (PPBL).

1. After February 29, 2024, deposit or credit transactions or top-ups aren’t allowed in customer accounts or related prepaid instruments like wallets, FASTags, NCMC cards, etc. Per the first point in the release, RBI won’t allow users to credit any money in the PPBL account. However, cashback or refunds are still allowed.
2. Even though credits are banned, withdrawal or utilization of balances in a user’s PPBL savings, current account, or other linked prepaid instrument (like those mentioned above) is permitted without any condition or restriction unless users exhaust their balance.
3. PPBL should not offer any banking service other than debits from the savings account balance or prepaid instruments, irrespective of the name and nature of services like AEPS, IMPS, etc., along with BBPU and UPI facility, after the stipulated date. However, it is not clear whether PPBL will be able to facilitate UPI transactions from external banks (similar to what apps like BHIM or Google Pay do).
4. The nodal accounts of PPBL and its parent company, One97 Communications, should be terminated as soon as possible or by the stipulated date.
5. The settlement for all transactions (initiated on or before February 29, 2024) and nodal accounts should be completed by March 15, 2024. Following this, no further transactions should be permitted.

What Does This Mean For Paytm Users?

Hence, from what it looks like, users will not be able to deposit money in their Paytm Payments Bank savings or current account. They should still be able to use their outstanding balance and/or for purchasing items until the stipulated date. However, whether Paytm users can send money to each other, which shows as a “credit” transaction in one account, isn’t clear yet. 

From one vantage point, this puts the company and its services in great jeopardy. Once users exhaust their current balance on eligible transactions, they won’t be able to use their Paytm Payments Bank account again, as they can’t top it up or add money to it. Other services provided by Paytm (which don’t include the NBFC operations), such as booking tickets, flights, movies, and purchasing items via Paytm Mall, should still remain intact.

We’re still awaiting official statements from Paytm. 

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