Paytm stock crashed and hit the lower circuit which was expected considering the RBI Restrictions On Paytm Payments Bank. RBI has ordered Paytm Payments Bank to stop accepting fresh deposits in its accounts or popular wallets including the Unified Payments Interface (UPI) facility after February 29, 2024.
“No further deposits or credit transactions or top-ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashback, or refunds which may be credited anytime,” Yogesh Dayal, a chief general manager with the central bank.
Withdrawal or utilisation of balances by its customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, up to their available balance, the statement added.
Why RBI Has Put Restrictions On Paytm Payments Bank?
Back in March 2022, RBI asked the Paytm Payments Bank to stop adding new customers. The comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in the bank, warranting further supervisory action, the RBI said, without disclosing details.
The action against Paytm Payments Bank was taken under Section 35A of the Banking Regulation Act, 1949, the central bank added.
Here is what Paytm has to say about the restriction by the RBI on Paytm Payment Bank operations.
Update: Paytm Payments Bank Limited, an associate of Paytm receives RBI directions. Paytm to expand its existing relationships with leading third-party banks to distribute payments and financial services products.
Read more here: https://t.co/NsPCOxp6VJ pic.twitter.com/fQjozyR11m— Paytm (@Paytm) January 31, 2024
Remember Paytm Payment Bank is just one of the services offered by Paytm, this restriction has nothing to do with the other services offered by Paytm including Paytm Money. Paytm has shared the following press release to its customers saying “Your Investments Are Safe”:
Dear Valued Client,
We are writing to inform you that the recent RBI press release pertaining to our associate company Paytm Payments Bank Ltd (PPBL) does not have any impact on the operations of Paytm Money Ltd (PML) and has no impact on your investments with PML in Equity, Mutual Funds or NPS.
At PML, building & protecting wealth for millions of Indians in a simple & transparent manner has been our mission. Subsequently, We would like to highlight the following:
- PML is regulated by SEBI and is fully compliant to all regulations and policies.
- Your equity, bonds, ETFs are all secured in your CDSL Demat Account and consequently are always safe and transactions as you are aware can only be done with your authorisation.
- Your Mutual Fund/SIP investments are with respective AMCs and are also safe. You can continue to invest/redeem as usual.
- Funds that are transferred to PML’s trading account are upstream (transferred) to Indian Clearing Corporation Ltd (ICCL) of BSE as per SEBI regulations and thus are also safe.
In summary, you can continue investing & trading as usual knowing we are here to protect your wealth and continue to democratize wealth management.
For investors who have set PPBL as their default account, you will need to change it before 29th February 2024 with a simple addition of an alternate bank. We shall communicate the specific process for the same separately and help you get this done.
