On Feb 29th, RBI (Reserve Bank of India) barred Paytm Payment Bank from depositing and credit transactions due to its persistent non-compliance and ongoing supervisory concerns.
These restrictions by RBI impact Paytm users heavily and raise many questions in their minds.
Let’s try to answer those questions:
What are the restrictions on Paytm?
After Feb 29th, Paytm Payment Bank won’t be allowed to accept deposits or top-ups in customer accounts, Prepaid instruments, Wallets, Fastags, or National Common Mobility cards (NCMC). But can withdraw money from their accounts up to the available balance. The other services such as UPI facilities, bill payments, fund transfer, and BBPOU (Bharat Bill Payment Operating Unit) will be unavailable. Creating a new account is also restricted by RBI.
How will it affect customers?
Users or Customers of Paytm Payment Bank cannot add any money to their savings accounts if linked to Paytm Payments Bank. They will not be able to send or receive money from their accounts. They won’t be able to make money transfers or bill payments and deposit or credit transactions through wallets will also be unavailable. Fastags will be inactive, but will be able to buy new tags.
However, Users can make payments through the Paytm app’s UPI facilities if it is linked to external banks like BOB, SBI, or HDFC, but not through Paytm Payment Bank.
There will be no impact on POS (point-of-sale) service as shopkeepers and business class use this device.
Can Paytm users withdraw their balance money?
As per RBI’s instruction, withdrawal of balance money is allowed from customer’s accounts ( savings accounts, current accounts, Fashtags, prepaid instruments, etc) without any restrictions, but only up to available balance, as deposits are not allowed. Other services like loans, mutual funds, bill payments, credit cards, and digital gold, are not mentioned by RBI.
How many customers will be affected?
Fintech company Paytm has over 100 million verified customers. It is also the largest issuer of Fastags with over 8 million Fastag units issued. In December, Paytm Fastags reported 57 million transactions which was the highest in the industry, so restrictions will affect transactions badly.
How will it affect Paytm and its response?
According to Paytm, in the worst-case scenario, it will impact Rs 300 crore to Rs 500 crore to its annual income from RBI’s restrictions. However, the company said that, it will try to improve its profitability. Paytm added that, it will take immediate steps and said that its parent company, One 97 Communications will work with other banks on different payment products due to ban on Paytm Payment Bank.
