New Delhi: In a press release issued on 11th March 2022, the Reserve Bank of India (RBI) invoked its authority under section 35A of the Banking Regulation Act, 1949, instructing Paytm Payments Bank Ltd (PPBL) to cease the onboarding of new customers with immediate effect.

The directive follows a Comprehensive System Audit report and subsequent compliance validation, revealing persistent non-compliances and ongoing material supervisory concerns within the bank. Consequently, the RBI, utilizing its powers under section 35A of the Banking Regulation Act, 1949, and other applicable authorities, issued the following directives to PPBL:

1. No new deposits, credit transactions, or top-ups will be permitted in customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, 2024, except for interest, cashbacks, or refunds.

2. Customers are allowed unrestricted withdrawal or utilization of balances from their accounts, including savings and current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc., up to their available balance.

3. After February 29, 2024, PPBL is prohibited from offering any banking services, except for those mentioned in point 2. This includes fund transfers such as AEPS, IMPS, BBPOU, and UPI facilities.

4. The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. must be terminated no later than February 29, 2024.

5. Settlement of all pipeline transactions and nodal accounts, initiated on or before February 29, 2024, must be completed by March 15, 2024, with no further transactions permitted thereafter.

These stringent measures underscore the RBI’s commitment to addressing regulatory concerns and ensuring compliance within the banking sector.