NEW DELHI: In a significant development, the Reserve Bank of India (RBI) has instructed Paytm Payments Bank Ltd. (PPBL) to cease onboarding new clients immediately. This directive comes under the authority of section 35A of the Banking Regulation Act, 1949. As a result, after February 29, 2024, no further deposits, credit transactions, top-ups, or withdrawals will be permitted in any customer accounts, including prepaid cards, wallets, FASTags, NCMC cards, etc., as outlined in the RBI circular.
The move holds particular significance for Paytm Payments Bank, known as the largest issuer of FASTags in India. In an August 2023 social media post, the bank proudly claimed its dominance in the FASTag market, stating, "We are the largest issuers of FASTag in India — processing millions of transactions across 300+ cities Pay karo tolls, #PaytmFASTag ke saath, kahin bhi, kabhi bhi."
Customers with existing balances in these instruments can use, withdraw, or transfer their funds without any restrictions. However, any top-ups or additional credits into these accounts are only allowed until February 29, 2024. Customers seeking assistance can contact Paytm's Toll-Free number: 1800-120-4210, providing necessary details for the closure of their FASTag accounts.
In response to these regulatory developments, Paytm's Founder and CEO, Vijay Shekhar, stated, "OCL already works with various other banks, and Paytm Payments Bank was one of the key banks. From here on, we are clear we will work with various other banks and not PPB."
Bhavesh Gupta, President, and COO of Paytm, emphasized that certain products offered by the Paytm app, such as FASTag, are already distributed by other banks and will continue seamlessly. He also noted, "Wallet is a very loved product by customers, but its pure play impact to the GMV is very, very, very small. UPI & Cards dominate, so it is a reasonably revenue-earning product."
As Paytm Payments Bank navigates this regulatory freeze, the company is set to reevaluate its strategic partnerships and explore collaborations with other banking entities. The impact of these changes on Paytm's overall operations and its position in the digital banking landscape remains a subject of keen industry observation.