8 Insights on RBI's decision to prohibit Paytm Payment Bank

1. About Paytm

Paytm Payments Bank is used by millions of people and is part of Indias largest payment firm Paytm.

2. Laidout Modifications

Unfortunately, the ban imposed by RBI instructs that all the fund transfer facilities including the facility of depositing new amounts, and credit transactions will be shut down on the platform. Any deposit or credit transaction apart from cashback, interest, or refund in any customer account, wallet, prepaid tool, FASTags, NCMC card, and top-ups will be prohibited.

3. Date of ban

The ban mentioned on the previous slide with be imposed on the platform from February 29.

4. How to use saved money

Any amount left in the prepaid devices, Fastag, National Common Mobility Card, etc., or savings bank accounts can be used without any restriction.

5. Why RBI imposed prohibition?

The central bank stated that the action against Paytm Payments Bank was taken under Section 35A of the Banking Regulation Act, 1949. In March 2022 according to RBI, they had asked Paytm Payments Bank to stop adding new customers. The bank was accused of persistent non-compliance and non-following of rules in a system audit report. RBI remained silent on this matter.

6. Paytm Payments Bank's Statement

Paytm has assured that they are taking immediate steps to comply with RBIs instructions. The fintech company is planning to work with different banks along with Paytm Payments Bank for different payment options. OCL plans to now work with other banks instead of Paytm Payments Bank Limited.

7. Paytm to face loss

The ban placed by RBI is predicted to cause a huge loss to Paytm. It is estimated that the company will face a loss of more than Rs 500 crore. However, some important decisions are likely to take place in the coming times which may improve Paytms situation.

8. Shares effected

Shares of Paytms brand One97 Communications Ltd have recently taken a hit of 20 percent.