RBI extends Paytm Payments Bank’s operation-ceasing deadline as it gets new banking partner

The Reserve Bank of India (RBI) has announced an extension to the deadline for Paytm Payments Bank Ltd (PPBL) to cease specific transactions, granting a 15-day reprieve, until March 15. This move comes amidst ongoing efforts by the central bank to address persistent compliance issues and supervisory concerns within the banking sector.

For Paytm Payments Bank, which has been besieged by regulatory action and the scrutiny of the RBI, news of a two-week reprieve comes as a welcome sigh of relief, and offers a critical buffer for customers and merchants scrambling to make alternative arrangements. Originally, on January 31, the RBI issued a directive to PPBL, instructing the bank to discontinue accepting deposits, credit transactions, and top-ups in customer accounts, wallets, and FASTags, by February 29. According to the RBI said, this was done in order to accommodate the interest of customers (including merchants) of PPB. All refunds, cashbacks, sweep-in from partner banks or interest are permitted credits into user accounts even after March 15.

To address concerns among PPBL customers and the broader public, the RBI has also released a comprehensive set of Frequently Asked Questions (FAQs), aimed at providing clarity on the regulatory action and addressing common queries. Merchants using Paytm’s QR code, soundbox, and PoS terminals can also continue operating if linked to other bank accounts, offering some continuity, even after the extended deadline of March 15. Furthermore, all withdrawal or debit mandates will continue to get executed till there is balance in the account, and will cease after the deadline.

This action was further prompted by significant irregularities observed in PPBL’s adherence to Know Your Customer (KYC) regulations, posing potential risks to customers, depositors, and wallet holders. Despite previous interventions by regulatory authorities, compliance challenges within PPBL’s operations have persisted, necessitating further regulatory action. The extension of the deadline provides a brief window for PPBL customers to transition to alternative banking services.

“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 15 March (extended from the earlier stipulated timeline of 29 February), other than any interest, cashbacks, sweep in from partner banks or refunds which may be credited anytime,” the RBI noted. “Further, it is directed that 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,” the RBI added.