Paytm Payments Bank’s future uncertain post-Feb amid RBI’s silence
Per the RBI’s criteria for licensing and operating payments banks, the maximum total customer balance limit for PPBL customers at the end of the day is Rs 2 lakh. The deposit base of PPBL has not been made public by either Paytm or PPBL.
is facing an uncertain future as a result of the Reserve Bank of India’s (RBI) decision to prohibit new deposits and top-ups effective February 29, 2024, and One97 Communications’ decision to cease doing business with PPBL. One97 Communications operates the Paytm service. Banking sources do not rule out the cancellation of the license once the February deadline has passed, even though the RBI has not made any indication that it may revoke the license granted to Paytm as the payments bank.According to people with knowledge, the payments bank is expected to see a drop in deposits and business as a result of the RBI limits, and the regulator has filed significant charges against PPBL, which may result in the license being revoked.The RBI declined to comment on the PPBL issue when approached.
After all is said and done, the total customer balance limit for PPBL customers cannot surpass Rs 2 lakh, per the RBI’s licensing and operational requirements for payments banks. The deposit base of PPBL has not been made public by either Paytm or PPBL. One97 Communications Ltd did not respond to an email sent to it.
The RBI stated last week that additional supervisory action was necessary due to repeated non-compliances and ongoing material supervisory concerns found in the bank as a result of the Comprehensive System Audit report and the external auditors’ following compliance validation report. This occurred while a number of seasoned bankers were serving on the PPBL board. They need to have made sure RBI regulations were followed. however, problems with data sharing and KYC have persisted for the past few years, according to sources.
On the board of the Punjab and Sind Bank were AK Jain, a former executive director; Manju Agarwal, a former deputy managing director of the State Bank of India; Shinjini Kumar, a former employee of Citibank and Bank of America; and Srinivas Yanamandra, a former compliance officer of the New Development Bank and ICICI Bank.
Due to shortcomings in regulatory compliance, the RBI fined Paytm Payments Bank Rs 5.39 crore in October 2023. Paytm violated the regulatory ceiling of the end-of-the-day balance in some customer advance accounts, neglected to monitor payout transactions and conduct risk profiling of entities receiving payout services, failed to identify the beneficial owner in respect of entities it onboarded to provide payout services, and even postponed reporting a cyber security incident. Founder and Chairman of Paytm Vijay Shekhar Sharma holds a 51 percent ownership in the company, while One97 Communications owns 49 percent of PPBL.
Customers will not be allowed to add funds or make deposits to your Paytm Payments Bank savings, current account, debit card, NCMC, transport, or FASTag after February 29, 2024, following an RBI directive. Even after February 29, 2024, there are no restrictions on the amount that can be taken out of the current balance. “Your money is safe with your bank, and the directive has no effect on your current balances in your wallet or account,” PPBL stated. However, parent company Paytm stated that the business disruption will last for a few weeks. It stated that there are certain operational adjustments that need to be completed, which could take a week or two, before we can resume the new business. And after that, the current company is only approximatelyPaytm refuted any allegations of having obtained or taken data from Paytm Payments Bank in the past or present. At any given time, Paytm Payments Bank retains ownership of the data pertaining to customers who use its wallet or UPI handle. No information is available for any client at any point in time. All of the models, whether they were for expanding our lending distribution business, insurance business, or any other activity we carried out on the Paytm app, were based on data or insights that Paytm is legally and regulatory permitted to access and use within the system, according to Paytm.
