RBI prohibits Paytm Payments Bank from offering services after Feb 29

New Delhi: The Reserve Bank of India prohibited Paytm Payments Bank Ltd on Wednesday from collecting deposits or conducting credit transactions, or top-ups, in user accounts or prepaid instruments like wallets and FASTags linked to those accounts beyond February 29.

Customers can, however, continue to use balances in their accounts, including savings and current accounts, "without restriction (and) up to their available" limit, according to the Reserve Bank order.

Additionally, the central bank has terminated the nodal accounts of Paytm's parent firm, One97 Communications Ltd., and Paytm Payments Bank Ltd., or PBBL.

The RBI's ruling noted "persistent non-compliance and continued material supervisory concerns in the bank" that were identified during a comprehensive audit of its systems by external parties.

This order is considered not to affect Paytm's Unified Payment Interface, or UPI, arm, NDTV reported.

Neither the corporation nor its founder/CEO, Vijay Shekhar Sharma, have commented thus far.

All of this follows a March 2022 order directing PBBL to cease accepting new customers "with immediate effect".

Essentially, the RBI move is against Paytm's banking operations, which means users can continue to use Paytm as a digital payment option as long as their account is tied to another bank.

In December, One97 Communication laid off hundreds of people across multiple verticals after implementing AI, or Artificial Intelligence, to automate some operations in an effort to increase cost-cutting.

The usage of AI is intended to cut expenses, increase operational efficiency, and eliminate redundant work, according to the company.