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Reserve Bank of India has imposed restrictions on Paytm Payments Bank and barred the entity from offering incremental banking services effective March 2024, due to concerns regarding breach of and compliance with regulatory norms.
“The Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action,” RBI said. The regulator had, in March 2022, directed Paytm Payments Bank to stop onboarding new customers and appoint an IT audit firm to conduct a comprehensive System Audit.
Paytm Payments Bank will not be allowed to accept deposits or undertake credit transactions or top ups in any customer accounts, prepaid instruments, wallets, FASTags and NCMC (National Common Mobility Cards), among others, post February 29, 2024.
However, any interest, cashbacks or refunds may be credited anytime. Further, the entity will need to permit withdrawal or utilisation of balances by customers, including from their savings and current bank accounts, prepaid instruments, FASTags and NCMC, without any restrictions and upto the available balance.
Other than fund transfers, utilisation or withdrawal, no other banking services and BBPOU (Bharat BillPay Operating Units) and UPI facility should be provided by the bank after February 29, 2024, the central bank said.
In addition, the nodal accounts of parent company One97 Communications and Paytm Payments Services will need to be terminated by February 29, 2024. Settlement of all pipeline transactions and nodal accounts, in respect of transactions initiated before February 29, 2024, will need to be completed by March 15, 2024 following which no further transactions will be permitted.
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