Paytm Payments Bank’s future remains uncertain after February amid RBI silence

Paytm Payments Bank’s future remains uncertain after February amid RBI silence

Paytm Payments Bank's
Paytm Payments Bank’s

As per RBI licensing and operating guidelines for payments banks, the total customer balance limit of a PPBL customer at the end of the day is Rs. Not more than Rs 2 lakh. Neither PPBL nor Paytm disclosed PPBL’s deposit base.

Paytm Payments Bank Ltd (PPBL) faces an uncertain future with the Reserve Bank of India (RBI)’s decision to ban new deposits and top-ups from February 29, 2024.

With PPBL. Although the RBI has not hinted at the possibility of revoking Paytm’s license for payments banking, banking sources have not ruled out revoking the license after the February deadline.

Sources associated with the matter said that after the RBI crackdown, the payments bank has faced a decline in deposits and business and the regulator has made serious allegations against PPPL, which has led to the cancellation of the license.

When contacted, RBI did not comment on the PPPL issue.

As per RBI licensing and operational guidelines for payments banks, the total customer balance limit at the end of the day for a PPBL customer is Rs. Not more than Rs 2 lakh. Neither PPBL nor Paytm disclosed PPBL’s deposit base. A mail sent to One97 Communications Ltd did not elicit any response.

The RBI had last week said that the external auditors’ comprehensive system audit report and compliance verification report have revealed continued compliance and continuing material supervisory concerns of the bank, which require further supervisory measures.

Paytm Payments Bank's
Paytm Payments Bank’s

“This happened at a time when there were many banking professionals on the BBBL board. They have to ensure compliance with RBI norms… but KYC issues and data sharing issues have persisted for years,” sources said.

AK Jain, former managing director of Punjab and Sind Bank, Manju Aggarwal, former deputy managing director of State Bank of India, Shinjini Kumar, former deputy managing director of Citibank and Bank of America, Srinivas Yanamandra, former compliance officer of New Development Bank and ICICI Bank. Is in PPPL group.

In October 2023, RBI imposed a fine of Rs on Paytm Payments Bank. A fine of Rs 5.39 crore was imposed. Paytm failed to identify the beneficial owner of companies engaged in providing payment services, did not monitor payment transactions, did not conduct risk profiling of companies accepting payment services and did not control the end-of-day balance of a particular customer.

Violated the limit. Prepaid accounts and delays in reporting a cyber security incident. One97 Communications holds 49 percent stake in PPPL and Paytm founder and chairman Vijay Shekhar Sharma holds 51 percent.

Paytm Payments Bank's
Paytm Payments Bank’s

According to the RBI order, after February 29, 2024, customers will not be able to deposit or add money to your Paytm Payments Bank Savings, Current Account, Debit Card, NCMC, Transit, FastTag.

However, there are no restrictions on withdrawals. Cash out from balance after 29th February 2024. PPBL said that this order will not affect your account or wallet balance and your money will remain safe in your bank. On the other hand, parent company Paytm said that the business disruption will continue for a few weeks.

That said, there are some operational changes in the weeks before the resumption of new business. It is an ongoing business to ensure that those who place orders switch from the PBPL bank account to another bank account which has already started functioning.

“I think there will be disruption for two weeks. To that extent there will be an EBITDA impact on our credit business. I have no shame in saying that. But we are confident that we will be back. We will be back,” COO Bhavesh Gupta said in a statement. “The situation will be completely normal by the beginning of March, if not earlier,” he said in a conference call.

Paytm has denied that it has any information about taking and receiving payments from the bank in the past or present. “At any point of time, Paytm Payments Bank has customer data using Paytm Payments Bank wallet or UPI handle and the information is not available.

We have used all models in the Paytm app, whether it is our insurance business or our loan underwriting business or anything else.

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