Updated February 18th, 2024 at 19:30 IST

How do RBI's guidelines on Paytm impact you?

The RBI has extended the operations halting of RBI has extended by 15 days, but what will merchants and consumers have to do differently after that?

Reported by: Business Desk
RBI on Paytm crisis | Image:Paytm CEO, RBI Governor
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New rules: The Reserve Bank of India has halted onboarding of new users for Paytm Payments Bank, the banking arm of listed fintech player Paytm.

Now extended by 15 days till March 15, the announcement means new users cannot register on Paytm, and existing users won't be able to use Paytm wallets, Fastags, or Mobility Cards after this date.

According to the RBI, Paytm was persistently not complying with orders. RBI had halted new customer onboarding for customers in a 2022 directive, which was followed by a crackdown on banking services.

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Customers will have to move their accounts from Paytm Payments Bank to other banks. Deposits and credit transactions will subsequently not be allowed.

In a list of FAQs (frequently asked questions) issued on Friday, RBI also clarified that Paytm QR code, Paytm Soundbox or Paytm POS terminal will continue to work after March 15, only if it is linked to other banks instead of PPBL.

Paytm said it has shifted its nodal account to Axis Bank from Paytm Payments Bank shortly after the announcement - a move that allows continuity of Paytm QR, Soundbox, card machines for merchants after the March 15 deadline set by the central bank. 

The nodal account of Paytm is like a master account in which all its customers, merchant transactions are settled.

Paytm Payments Bank Ltd (PPBL) is a sister concern of Paytm, with more than 100 million KYC customers. It also has 300 million wallet users, 30 million bank account holders and a 17 per cent market share in FASTag by value.

All basic transaction services through Paytm Payments Bank’s various platforms - Unified Payments Interface (UPI), IMPS, Aadhaar-enabled payments have been frozen after the RBI directive.

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Even as money cannot be received into customer accounts, users can withdraw it even after the deadline.

What happens to Paytm UPI

Users will be able to use UPI and wallet if the underlying bank account is with a different bank. 

Customers will only be able to use Paytm as a digital payment option, so long as their bank account is linked to an external bank.

If the Paytm app is linked to users' bank account, there will be no restrictions on usage of the app to transfer money, or withdraw it from the wallet or account. But they will not be able to receive money after the stipulated deadline.

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Future of Fastags and National Common Mobility Card

Customers can extinguish the balances already loaded on these services, but cannot load these instruments with more money. 

Users must procure a new FASTag issued by another bank before March 15, 2024. 

SInce credit balance transfer is not available in the FASTag product, the old PPBL account must be closed and a refund can be sought from the bank.

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Published February 18th, 2024 at 18:44 IST