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RBI's Paytm Payments Bank Crackdown May Be Precursor To Revoking Licence: Exclusive

The payments bank is allowed to approach the regulator for remedial measures.

<div class="paragraphs"><p>A Paytm QR code scanner at a store. (Photo: Usha Kunji/BQ Prime)</p></div>
A Paytm QR code scanner at a store. (Photo: Usha Kunji/BQ Prime)

Reserve Bank of India's move to block fresh deposits at Paytm Payments Bank may have been in preparation of its licence cancellation, people in the know told NDTV Profit.

The regulator on Wednesday said that Paytm Payments Bank cannot accept fresh deposits, top-ups or credit transactions in its account after Feb. 29. The move came after the RBI noted persistent non-compliance and major supervisory concerns at the payments bank.

The strictures were in addition to a previous restriction on Paytm Payments Bank barring it from onboarding new customers since March 2022.

According to the people quoted above, an immediate cancellation of licence would have unduly disrupted the payments ecosystem. The RBI is likely waiting to ascertain the impact of such a cancellation, the people said.

NDTV Profit awaits response to queries emailed to Paytm and the RBI.

The payments bank is allowed to approach the regulator for remedial measures. In a statement to the exchanges on Wednesday, the bank's parent One 97 Communications Ltd. said that Paytm Payments Bank is working with the regulator to meet compliance requirements.

In its exchange notification, Paytm said that it will accelerate its diversification plans and completely move to other bank partners. The company has been working with other banks since March 2022.

"Going forward, OCL will be working only with other banks, and not with Paytm Payments Bank Limited," the exchange notice said. "The next phase of OCL’s journey is to continue to expand its payments and financial services business, only in partnerships with other banks."

Paytm's customers can continue to use the funds available in their payments bank accounts for withdrawals and transactions. However, they will not be able to add additional funds after Feb. 29.

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