RBI extends deadline for Paytm Payments Bank wind down to March 15

The Reserve Bank of India has extended the deadline for winding down operations of Paytm's banking arm till March 15 days ‘in the interest of consumers’, it said on Friday.

"No further deposits or credit transactions or top-ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, etc after March 15, 2024," RBI said.

RBI had earlier mandated One97 Communications to stop operations for Paytm Payments Bank from February 29.

The decision is in cognisance of customer and merchant interest, RBI said, adding that they merchants “may require a little more time to make alternative arrangements and the larger public interest.” 

But RBI has not changed the deadline for terminating nodal accounts of Paytm Payments Bank. 

“Settlement of all pipeline transactions in nodal accounts referred above (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024 and no further transactions shall be permitted thereafter,” as per the guidelines.  

RBI had mandated Paytm Payments Bank to halt onboarding of customers after ‘persistent’ supervisory concerns which were serious in nature, according to an earlier statement.

The RBI has issued a 30-pointer guideline on business restrictions imposed on Paytm Payments Bank, for savings and current accounts, deposits and recurring payments, among other concerns.

Commenting on the development, Paytm CEO Vijay Shekhar Sharma said, “Paytm QR, Soundbox and EDC (card machine) will continue to work like always, even after March 15.” 

According to point 21 in the FAQs shared, merchants can use the service so long as they are linked to another bank account.

“If your receipt and transfer of funds is linked to any bank account other than Paytm Payments Bank, you can continue to use this arrangement even after March 15, 2024,” the directive reads.

The RBI has further directed PPLB to facilitate withdrawals upto their available balance from all accounts and wallets, ‘excluding the ones that are frozen or lien marked by Law Enforcement or judicial authorities.’

“The bank shall facilitate a seamless withdrawal of customer deposits that are parked with partner banks under the automatic ‘sweep-in sweep-out’ facility without causing any inconvenience to such customers,” it further mandated.

RBI had earlier refused any changes to the directive, saying there was "hardly any room" for any kind of review of the regulatory action against Paytm's banking arm.