On January 31, just a day before the Union Budget, the Reserve Bank delivered a significant blow to Paytm Payments Bank. The ban on wallet top-ups and Fastags without accepting deposits has left Paytm users anxious. The question now is, will the RBI take more stringent measures after February 29?
Paytm Payments Bank Under Scrutiny
The Reserve Bank of India (RBI) recently imposed severe restrictions on Paytm Payments Bank, prohibiting deposits in savings accounts and top-ups in wallets and Fastag accounts. This decision, effective from February 29, has sent shockwaves among customers, impacting not only the bank but also its parent company, One97 Communications.
Following these actions, Paytm’s shares plunged by 40 percent, hitting the lower circuit at a rate of 20 percent for two consecutive days. Vijay Shekhar Sharma, Paytm’s founder and CEO, expressed concerns about the potential risk of the annual operating income falling from Rs. 300 crore to Rs. 500 crores. He holds a 51 percent stake in the bank, with the remaining 49 percent owned by One97 Communications.
License in Jeopardy?
Reports from reliable sources suggest that the RBI might not be satisfied with the imposed sanctions alone. There are indications that the central bank is contemplating the cancellation of Paytm Payments Bank’s license. While customers have been given until February 29 to withdraw their deposits for safety, an official announcement on the license is anticipated on March 1, according to insiders.
The alleged violations by Paytm Payments Bank include serious breaches of RBI norms, particularly related to the misuse of customer documentation terms. Non-compliance with Know Your Customer (KYC) norms and the absence of periodic audits have further compounded the situation. Temporary restrictions have been imposed after an external audit, with the central bank expected to make a final decision based on Paytm Payments Bank’s response. A positive and appropriate response may lead to the reconsideration of the RBI’s decision.
As the situation unfolds, Paytm Payments Bank faces a critical juncture. Customers and stakeholders eagerly await the outcome of this regulatory saga, wondering if there’s a chance for redemption or if the RBI will proceed with the cancellation of its license.
