The news of strict restrictions being imposed on Paytm has left people worried. Some Paytm customers fear losing their money, while others are concerned about what the future holds. Will the Paytm app stop working?
For millions of people in the country, using Paytm for recharges, ticket bookings, stock market, IPOs, electricity bills, FASTags, credit cards, loans, insurance, fixed deposits, and various other services has become an integral part of life.
In this special story, we will answer all the questions related to Paytm's services that are on the customers' minds.
Additionally, we will delve into the 15-year journey of Paytm, the allegations against it, RBI's restrictions, the impact of RBI's orders on customers, and what other options they have.
Paytm is a brand that primarily offers three types of services - Payment, Merchant, and Financial Services.
The parent company of Paytm is called One97 Communications Limited (PPBL). This company has an associate bank named Paytm Payments Bank Limited. One97 Communications holds a 49% stake in PPBL, while Vijay Sharma holds a 51% share.
The RBI has imposed restrictions on Paytm Payments Bank Limited and its services. PPBL offers digital banking services, including savings accounts, current accounts, and fixed deposits in collaboration with partner banks.
Paytm mostly provides its services such as wallets, UPI, and FASTags through this bank.
The Reserve Bank of India (RBI) has imposed strict restrictions on Paytm Payments Bank Limited (PPBL) due to suspicious transactions.
As of March 11, 2022, Paytm Payments Bank has been prohibited from adding new customers. The RBI's recent order stated that a comprehensive external audit of Paytm uncovered "persistent non-compliance and ongoing significant supervisory concerns within the bank.
Now, customers of Paytm Payments Bank will not be able to deposit balances in their savings-current accounts, wallets, and FASTags after February 29. Paytm must settle its nodal accounts by March 15.
Until February 29, customers can conduct all types of transactions through Paytm Bank. However, after this date, they will not be allowed to deposit new funds or top up their Paytm accounts.
Nevertheless, any funds deposited through any medium until February 29 can be used by customers anytime as long as there is a balance in their accounts.
The RBI's clear directive is that Paytm must provide full facilities to its customers for withdrawing and using their funds. This facility is also for those customers who have Paytm's savings, current, or prepaid accounts, or use FASTags.
This also includes the National Common Mobility Card, which is used for paying travel fares or toll taxes.
Paytm has faced this embargo from the RBI due to suspicions of transactions worth crores between Paytm Wallet and its bank. Allegations suggest that Paytm Payments Bank Limited opened millions of accounts without adhering to KYC regulations.
Through these accounts, transactions amounting to crores have taken place, surpassing the specified limit for prepaid instruments, raising concerns of potential money laundering.
It's worth noting that approximately 33 million customers of Paytm Wallets engaged in more than 24.72 crore transactions exceeding ₹8,000 crores by December 2023.
These transactions involve the purchase and sale of goods or services. Additionally, there were 2.07 crore transactions for money transfers, totalling more than ₹5,900 crores.
Vijay Shekhar Sharma, the son of a school teacher from Aligarh district in Uttar Pradesh, laid the foundation of Paytm.
During his engineering studies in 1997, he created a website called indiasite.net, which he later sold for millions of rupees.
Inspired by the success story of Jack Ma, the founder of the Chinese company Alibaba, Vijay Sharma was deeply influenced.
He observed how Alibaba Group focused more on smartphones than desktop computers. This inspired him to conceive the idea of digital payments.
The full form of Paytm is 'Payment Through Mobile'. Initially, Paytm provided Indian customers with the convenience of buying groceries, fruits, movie tickets, and making payments through their mobile phones.
He planned to facilitate buying and selling in the marketplace through Paytm.
An online platform was created for buying and selling everything from needles to mobile phones.
Gradually, Paytm kept adding various services and quickly became a major brand.