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India’s Paytm Payments Bank has been given more time by the central bank to wind down its operations, while its parent company has signed on a new banking partner to try to keep some of its popular products running and survive its current crisis.
The Reserve Bank of India (RBI) in January ordered Paytm Payments Bank, an associate of One 97 Communications (OCL) – also known as Paytm, to stop accepting any fresh deposits in its accounts, or wallets, from Feb. 29. That deadline was extended to March 15, the RBI said on Friday.
“The company (Paytm) has shifted its nodal account to Axis Bank (by opening an escrow account) to continue seamless merchant settlements as before,” Paytm said in a release.
Paytm QR codes, soundbox and card machines will continue to work as before, even beyond March 15, the company added.
The action against Paytm Payments Bank was triggered by what RBI officials called persistent non-compliance with regulations. Earlier this week, India’s financial crime fighting agency began looking into details of overseas transactions on the platform.
RBI said the deadline extension was to allow customers, including merchants, “a little more time” to make alternative arrangements.
“No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, etc after March 15, 2024,” it said.
Separately, the RBI also issued a detailed set of customer clarifications.
The regulator said customers can withdraw or use funds from their Paytm Payments Bank accounts and wallets until the time those funds are exhausted but they cannot add any fresh funds after March 15.
Customers who receive their salaries or other transfers including government subsidies into these accounts have to make alternate arrangements by mid-March.
Merchants using Paytm’s QR codes for accepting payments can continue to do so if these QR codes are linked to accounts other than those held by Paytm Payments Bank.
The bank has nearly a fifth share of India’s toll collections through a product called FASTag. The RBI said these FASTags cannot be recharged or topped up after March 15.
Non-executive chairman of Paytm Payments Bank Vijay Shekhar Sharma has met with RBI officials and the finance minister seeking to lobby against the crackdown, but RBI Governor Shaktikanta Das said on Monday that there would be no review of its decision.
© Thomson Reuters 2024
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