In a significant development, the Reserve Bank of India (RBI) has instructed Paytm Payments Bank to cease accepting deposits or top-ups in any customer accounts, wallets, FASTags, and other instruments after 29 February. The directive, issued due to persistent non-compliances and ongoing supervisory concerns, has prompted Paytm users, especially those with FASTags, to seek clarity on the impact of this decision.
According to the RBI statement, “No further deposits or credit transactions or top-ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after 29 February 2024.” The central bank has directed that no other banking services, except for specified transactions like fund transfers (AEPS, IMPS, etc.), BBPOU, and UPI facility, should be provided by the bank after the given date.
Furthermore, the RBI has called for the termination of the “nodal accounts” of One97 Communications Ltd and Paytm Payments Services, not later than 29 February 2024. Settlement of all pipeline transactions and nodal accounts initiated on or before February 29, 2024, should be completed by 15 March 2024, with no further transactions permitted thereafter.
The move follows the Indian Highways Management Company’s (IHMCL) decision to prohibit Paytm Payments Bank from issuing new FASTags due to non-compliance with prescribed parameters.
For Paytm FASTag users, the directive means that while they can continue using their existing FASTags after 29 February, they won’t be able to top off or recharge them using the Paytm Wallet. Users are advised to utilize the existing balance until depleted, as recharging or porting the FASTag to another bank from Paytm Payments Bank will not be possible post the specified date.
In response to these developments, Paytm announced its intention to collaborate with various other banks instead of Paytm Payments Bank. The company emphasized that existing user deposits in savings accounts, wallets, FASTags, and NCMC accounts can still be utilized, but credit top-ups for Paytm users are blocked after 29 February.
The RBI’s directive has prompted Paytm to decrease its dependency on Paytm Payments Bank and work with other banks for continued service provision. Paytm President Madhur Deora stated, “Going forward, we will work with large banks who also provide these services to other consumer companies.”
Customers making Unified Payments Interface (UPI)-based payments through the Paytm app won’t experience immediate effects, but those using UPI payments with accounts linked to Paytm Payments Bank will face interruptions after 29 February. Wallet services will also be affected as PPBL is essential for a user’s Paytm wallet. Money can be deposited into the wallet until 29 February, and clients can spend the balance until depleted.
