Yesterday, the RBI imposed restrictions on Paytm Payments Bank and barred it from offering incremental banking services effective March 2024, due to concerns regarding breach of and compliance with regulatory norms.
RBI in March 2022, directed Paytm Payments Bank to stop onboarding new customers and appoint an IT audit firm to conduct a comprehensive System Audit.
As per the new directive issued yesterday, starting 1st March 2024, Paytm Payments Bank will not be allowed to accept deposits or undertake credit transactions or top ups in any customer accounts, prepaid instruments, wallets, FASTags and NCMC (National Common Mobility Cards), among others.
Other than fund transfers, utilisation or withdrawal, RBI said that no other banking services and BBPOU (Bharat BillPay Operating Units) and UPI facility should be provided by the bank after February 29, 2024.
In addition, the nodal accounts of parent company One97 Communications and Paytm Payments Services will need to be terminated by February 29, 2024. Settlement of all pipeline transactions and nodal accounts, in respect of transactions initiated before February 29, 2024, will need to be completed by March 15, 2024 following which no further transactions will be permitted.
Post this news, no prizes then for guessing that Paytm is currently the top loser on the BSE; from its close of Rs.761, the stock opened 20% lower at Rs.608.80, hitting the LC of the day.