In a notification issued on Wednesday, the Reserve Bank of India (RBI) has directed Paytm to cease offering basic payment services, including Unified Payments Interface (UPI), Immediate Payment Service (IMPS), Aadhaar-enabled payments, and bill payment transactions, effective February 29. Additionally, the Noida-based company has been instructed to discontinue accepting deposits, credit transactions, or any wallet top-ups after the specified date. Despite these restrictions, the RBI has permitted customers to withdraw and utilize funds from their Paytm accounts until the available balance is exhausted, aiming to ensure customer convenience.
This action by the banking regulator represents one of the most severe measures taken against a listed banking entity in recent times. The RBI cited significant compliance issues in Paytm, emphasizing that a comprehensive system audit report and subsequent compliance validation report by external auditors revealed persistent non-compliances and ongoing material supervisory concerns. These findings prompted the RBI to take further supervisory action against the company.
It’s noteworthy that on March 11, 2022, the RBI had already directed Paytm to halt the onboarding of new customers. This latest move signifies a substantial disciplinary measure initiated by the RBI against the prominent fintech firm, effectively instructing it to cease all banking services to its customers within a month.
