RBI’s Restrictions On Paytm: What Happens To Your Money Now?
The Reserve Bank of India (RBI) recently placed significant restrictions on Paytm Payments Bank.
The central bank’s directive stops the bank from accepting deposits or adding money to customer accounts, wallets, FASTags, and other Paytm instruments after February 29, 2024.
This action is due to persistent issues with the bank’s operations and failures to comply with regulatory requirements. The RBI had already stopped Paytm Payments Bank from adding new customers since March 11, 2022.
Paytm’s shares took a severe hit following this announcement, with a 20% drop in value, its shares are at nearly ₹600. The parent company, One97 Communications Ltd, saw its shares decline sharply in the stock market.
For Paytm users, this means certain limitations, but all of their money and investments are safe.
While they can still withdraw or use the money in their accounts, including savings, current accounts, and prepaid instruments, they cannot add new funds after February 29, 2024.
This includes no further transactions in FASTags and National Common Mobility Cards (NCMC). However, there are no restrictions on transferring money out of these accounts.
In response, Paytm Payments Bank stated it is working to comply with RBI’s directives.
One97 Communications Ltd, which owns Paytm and holds a 49% share in Paytm Payments Bank, emphasized that its operations are not solely reliant on the payments bank.
The company plans to accelerate its move to collaborate with other banks for its payment and financial services, indicating a shift in strategy following RBI’s order.
Regarding the safety of customer funds, there’s no indication of any immediate risk. Users can access and use their existing funds without restrictions.
However, the restriction on adding new funds after the specified date is a significant change for customers used to Paytm’s services.
While Paytm faces challenges due to RBI’s restrictions, it’s taking steps to adapt its business model and continue offering services through partnerships with other banks.
For customers, their existing funds remain accessible, although the way they use Paytm’s services might change in the future. Paytm is expected to continue all its services similar to PhonePe and GPay.