Paytm Payments Bank, a subsidiary of One 97 Communications (OCL) and a prominent player in India’s digital banking sphere, has received an extension from the Reserve Bank of India (RBI) to wind down its operations, with a new deadline set for March 15. This comes amidst regulatory scrutiny and efforts by the parent company to salvage key services by partnering with Axis Bank for nodal account operations.
Initially directed by the RBI to cease fresh deposits in accounts and wallets by February 29 due to persistent regulatory non-compliance, Paytm Payments Bank now has until March 15 to facilitate a smoother transition for its customers and merchants. The extension aims to provide users with additional time to make alternative arrangements, according to the RBI’s statement issued on Friday.
In a bid to ensure continuity of service for its popular products, Paytm has shifted its nodal account to Axis Bank, leveraging an escrow account setup to enable seamless merchant settlements. Notably, Paytm QR codes, soundbox, and card machines are expected to remain operational even after March 15, offering a semblance of stability amid the ongoing transition.
The RBI’s directives also shed light on the fate of various Paytm offerings post the March 15 deadline. While customers can utilize existing funds in their accounts and wallets until depletion, the addition of fresh funds will be prohibited. This poses a challenge particularly for those receiving regular income or government subsidies through Paytm channels, who are urged to make alternative arrangements promptly.
Merchants utilizing Paytm QR codes for transactions may continue to do so provided they are linked to accounts outside of Paytm Payments Bank. However, key services like FASTags, integral to nearly a fifth of India’s toll collections, face a halt in recharging or topping up post March 15, per RBI directives.
Despite efforts by Paytm’s non-executive chairman, Vijay Shekhar Sharma, to lobby against the regulatory crackdown, including meetings with RBI officials and the finance minister, the central bank remains firm on its decision. RBI Governor Shaktikanta Das reiterated on Monday that there would be no reconsideration of the regulatory stance.
As the clock ticks towards the March 15 deadline, Paytm and its stakeholders navigate a pivotal juncture, with the fate of its operations and services hanging in the balance amidst heightened regulatory scrutiny.
