The Reserve Bank of India (RBI) has cancelled the banking licence of Paytm Payments Bank, and said to make an application for winding up of the bank before the High Court. Paytm Payments Bank Limited is prohibited from conducting the business of ‘banking’ or any additional business, RBI said.
“Paytm Payments Bank Limited has enough liquidity to repay its entire deposit liability upon winding up of the bank,” RBI added.
In March 2024, RBI had prohibited the Paytm Payments Bank from accepting new deposits, credit transactions, or top-ups in customer accounts, wallets, FASTags, or NCMC cards.
Previously, the bank was directed to stop onboarding of new customers with effect from March 11, 2022. Thereafter, on January 31, 2024 and February 16, 2024, certain business restrictions were also imposed on the bank which, inter alia, disallowed any further deposits/credits/ top-ups in existing customer accounts, prepaid instruments, wallets, etc.
What will happen to Paytm UPI?
One 97 Communications Limited, the parent company of Paytm in an exchange filing at NSE said, Company does not have any exposure to PPBL or any material business arrangements with PPBL. No services provided by the Company are in partnership with PPBL. Additionally, PPBL operates independently, with no board or management involvement from the Company.
Paytm and its services, which have been operating without interruption, will continue to operate uninterrupted. These include the Paytm app, Paytm UPI, Paytm Gold and all other services offered by its subsidiaries and associated companies such as Paytm QR, Paytm Soundbox, Paytm card machines, and Paytm Payment Gateway, Paytm Money among others.
Its UPI handle was shifted to a multi-bank system led by Yes Bank, and merchant payments were also moved to partner banks.
Paytm later received approvals to add new UPI users and a payment aggregator licence. As a result, its core payment services continue to run normally despite the bank’s closure.
Paytm Payments Bank customers can withdraw existing balances without any issue. However, fresh deposits and wallet top-ups continue to be restricted.
“This matter is related to PPBL, a separate entity, and any reference to this matter should be made solely in the context of PPBL, and not attributed to the Company,” Paytm said in its exchange filing.
