RBI extends deadline for Paytm Payments Bank customers

The Reserve Bank of India (RBI) on Friday extended the timeline for Paytm Payments Bank, allowing its customers to carry out services like deposits or credit transactions, top-ups, wallets, FASTags, National Common Mobility Cards, etc. till March 15, 2024, from February 29, 2024, earlier.

In its latest order, the central bank says keeping in view the interest of customers (including merchants) of Paytm Payments Bank Ltd (PPBL), who may require a "little more time" to make alternative arrangements and the larger public interest, it has decided to extend the deadline.

"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 (extended from the earlier stipulated timeline of February 29, 2024), other than any interest, cashback, sweep in from partner banks or refunds which may be credited anytime," the central bank says in the updated directive.

It also says that "withdrawal or utilisation" of balances by its customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. will be "permitted" without any restrictions, up to their available balance. There has been no change in this directive from the earlier one.

The apex bank, however, has extended the deadline for the continuation of banking services to March 15, 2024. "No banking services, other than those referred in (ii) above, like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after March 15, 2024 (extended from the earlier stipulated timeline of February 29, 2024)," the RBI said.

However, for the purpose of withdrawal or utilisation of available balance by customers or wallet holders, such "fund transfers including AEPS, IMPS and UPI may be allowed anytime", the RBI has clarified.

On its earlier order of the nodal accounts of One97 Communications and Paytm Payments Services, which were maintained by Paytm Payments Bank, there has been no change and the RBI has said they need to be terminated at the earliest, in any case not later than February 29, 2024.

"Settlement of all pipeline transactions in nodal accounts referred to in item (iv) above (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024, and no further transactions shall be permitted thereafter (no change)," the RBI said.

In an important direction, the RBI has also said that withdrawals up to their available balance should be facilitated by the bank from all accounts and wallets, excluding the ones that are frozen or lien marked by law enforcement or judicial authorities.

Further, Paytm Payments Bank is directed will facilitate a seamless withdrawal of customer deposits that are parked with partner banks under the automatic ‘sweep-in sweep-out’ facility without causing any inconvenience to such customers.

The RBI on January 31, 2024, had taken stringent action against fintech major Paytm’s payment services arm. Paytm Bank, meanwhile, is working on various measures to comply with the guidelines. The board of One 97 Communications has now formed a group advisory committee chaired by former SEBI chairman M Damodaran, to work with it in further strengthening compliance, and regulatory matters.