The Reserve Bank of India (RBI) authorities have cancelled the banking license of Paytm Payments Bank. The apex bank issued a statement on Friday stating that the payments bank's license has been cancelled due to allegations of not following prescribed rules for a long time and concerns about depositors' interests being compromised. It was announced that this decision will be effective from Friday, April 24. This is the first time RBI authorities have taken such strict action against a payments bank.
The Reserve Bank's statement said that Paytm Payments Bank did not comply with the conditions that were set when it received its license. Additionally, there are allegations of violating certain rules of the Banking Regulation Act, 1949.
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RBI announced that this license cancellation became effective immediately after business hours on Friday. As a result, Paytm Payments Bank will no longer be able to operate any kind of 'banking' services.
What will happen to your money?
The biggest question after this RBI action is, what will happen to those who have money? On this matter, RBI has clearly stated that customers' money is safe. The bank has sufficient liquidity to return all deposits. This means there is no risk of customers losing their money.
Will Paytm App, UPI usage stop?
No, these services are not stopping. One97 Communications (which operates the Paytm brand) announced in a stock exchange filing that their core services will continue normally.
These include—
Paytm App
Paytm UPI
QR code payment
Soundbox
Card machine
Payment Gateway
The company claims that the cancellation of Paytm Payments Bank's license will have no impact on these services.
Many also have the question whether Paytm Wallet can be used. According to the company, wallet services will also continue for now. However, this may be operated through other banking partners in the future.
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What is the company saying?
In documents submitted to the stock exchange, One97 Communications stated that they have no financial risk in their Paytm Payments Bank. Because by March 31, 2024, they had already considered the value of that investment as zero (impaired).
Additionally, the company announced that their Paytm Gold and Paytm Money services will not be affected by this decision and will operate normally. Overall, while this RBI action is significant, there is little likelihood of major problems in ordinary users' daily payment systems. However, some changes may come in the future—that's what will be watched now.
