Concerns regarding the data and money flows between Paytm Payments Bank and Paytm were purportedly raised by an RBI audit, however the report claimed that these issues were still unaddressed.
Paytm Payments Bank is not permitted to provide any kind of banking services, including receiving deposits and handling payment processing, by the Reserve Bank of India. Unlike Yes Bank or other institutions, this decision was the result of a long-standing issue that began two years ago.
According to a Bloomberg story, the fintech’s issues began two years ago when the company’s banking division and payments app had suspicious transactions. Concerns regarding the data and money flows between Paytm Payments Bank and Paytm were purportedly raised by an RBI audit, however the report claimed that these issues were still unaddressed.
Paytm ignored the cautions
The RBI grew more concerned about managerial overlap between Paytm and the bank as Paytm ignored the warnings. According to the Bloomberg story, they observed the same group of senior executives and decision-makers representing both the bank and the larger fintech business, raising the possibility of conflicts of interest.
Partners in lending may reconsider relationships
In a note, Macquarie analysts stated, “The bigger issue is Paytm has not been on the good books of the regulator and going forward, their lending partners also could possibly re-look at the relationships.” According to the Bloomberg story, Paytm may file an appeal with the RBI that issued the directive and then the board of the central bank. IT may also use the legal system to pursue legal action. However, it’s apparently evident that the RBI “doesn’t want Paytm to operate a payments bank anymore.”
Paytm stated that it was collaborating with the banking regulator to allay worries as soon as possible and that it was acting quickly to comply with the RBI’s directive.
To what extent should you worry if you utilise Paytm?
Up until February 29th, users can accept or receive money through the app. Customers can only withdraw or transfer money from their Paytm wallet or Paytm Payments Bank account after this date, or until their whole available balance is used up. Since Paytm has been prohibited from providing services like financial transfers using AEPS (Aadhar Enabled Payment System), IMPS (Immediate Payment Service), and UPI (Unified Payments Interface), no new deposits or top-ups into the bank account or wallet will be permitted beyond the deadline.
Vijay Shekhar Sharma announced on X on Friday morning that the Paytm app will “keep working beyond 29 February as usual.”
Alright, what about my Paytm app, Fastag, and the NCMC cards the bank handed me?
Beginning on March 1, top-ups or new credits into these accounts will not be permitted. The Paytm app is unaffected. It is still fully functional for you to utilise.
See also: Paytm will continue to function after February 29. User worry is eased by Vijay Shekhar Sharma
Do retailers who use Paytm-linked QR codes need to be concerned?
New bank partners will need to be migrated by Payments Bank. Paytm, formerly known as One 97 Communications, owns 49% of Paytm Payments Bank. The founder and CEO of Paytm, Vijay Shekhar Sharma, owns the remaining 51%. Macquarie Capital claims that the bank has all 330 million wallet accounts belonging to the parent company, meaning that any money held in those accounts is deposited with the payments bank.
Bimal Mardi is a Professional Content Writer. He works in First Santal Broadcast Network TV/ News channel in India. Bimal Maradi writes about Technology, Education and Tech Product Reviews