The Reserve Bank of India (RBI) has banned Paytm's banking arm Paytm Payments Bank (PPBL) from adding new customers with immediate effect. RBI has issued this order on 31 January 2024. The Central Bank has taken this action against Paytm Payments Bank under the Banking Regulation Act for not following the rules.
Along with this, RBI has also ordered the company to stop adding amount to the account of existing customers after February 29. After this order, there will be no credit/deposit transactions in Paytm Payment Bank. And after February 29, Paytm Payment Bank will not be able to provide banking services.
The central bank has said that a system audit report and subsequent compliance validation report have revealed that the company has consistently flouted compliance standards.
The audit also revealed supervisory lapses. Bank should settle nodal account by 15th March. Apart from this, many other supervisory shortcomings related to Paytm Bank have also come to light, due to which more necessary actions will be taken against the company in future.
However, RBI has clarified that existing customers of Paytm Payments Bank can withdraw and utilize their currently available balance. Be it savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Card, etc., withdrawal or utilization of the balance in these will be allowed without any restriction.
