Paytm Payments Bank has begun voluntary winding up after the Reserve Bank of India cancelled its licence over regulatory lapses. The company has assured its customers that the impact on its parent company, One 97 Communications, and its services will be minimal.
However, the development has raised concerns among existing customers about access to their account balances and the process for withdrawal. According to banking rules, deposits of up to Rs 5 lakh per customer are insured and protected by the Deposit Insurance and Credit Guarantee Corporation (DICGC), which is a wholly owned subsidiary of the RBI.
Customers are expected to get their funds back as per the standard settlement process. However, there are some regulations and limitations they must be aware about.
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Deposit Insurance Rule
While deposit insurance provides a safety net, customers need to understand that the payouts are not immediate. Under DICGC rules, deposits of up to Rs 5 lakh per depositor per bank are protected. This limit includes both principal and accrued interest across all accounts in the same bank. It covers savings accounts, current accounts, fixed deposits and recurring deposits. If a customer holds multiple accounts in one bank, the total balance is combined and insured up to the Rs 5 lakh limit.
The cover applies only to deposits. Mutual funds, bonds and other products are not protected under the DICGC rules. Customers must note that insurance is applicable per depositor per bank, not per account. This means that splitting money across multiple accounts does not increase coverage.
Rules For Paytm Payments Bank
Payment banks are covered under the DICGC protection. The RBI has said Paytm Payments Bank has sufficient liquidity to fully repay all depositors. Additionally, Paytm has clarified that the action by the RBI is limited to the payments bank and its app, UPI, and other services continue without disruption.
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On refund timelines, experts noted that the process has been streamlined in recent years, but customers must note that updated KYC, nomination details and records help avoid delays.
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