The RBI ordered the Paytm Payments Bank to be shut down, citing “non-compliance issues and concerns” within the bank.
Paytm Payments Bank will stop offering services like accepting deposits and processing credit transactions starting March 15, as directed by the Reserve Bank of India. RBI imposed restrictions on Paytm Payments Bank on January 31, citing serious rule violations. The Bombay Stock Exchange (BSE) has also issued guidelines for investors who use the bank exclusively for stock trading.
Why is Paytm Payments Bank being shut down?
RBI ordered Paytm Payments Bank to be shut down, citing “non-compliance issues and concerns” within the bank. A report stated that thousands of accounts at the bank were opened without proper identification, which led to fears of potential involvement in illegal activities like money laundering. This information was also shared with authorities including the Enforcement Directorate (ED) and the Prime Minister’s Office, according to sources.
In response, Revenue Secretary Sanjay Malhotra mentioned that the ED will investigate Paytm Payments Bank, which is set to temporarily shut down by March 15. The report also revealed multiple accounts being linked to the same identification proof, with transactions amounting to significant sums. There was also an unusually high number of dormant accounts.
What will change after Paytm Payments Bank shuts down?
-Customers will not be able to deposit money into their Paytm Payments Bank accounts, but will still be able to withdraw or transfer funds after March 15.
-Salary Credit, Direct Benefit Transfers, or Subsidies will not be available in Paytm Payments Bank accounts, but refunds, cashbacks, and sweep-ins from partner banks will still be allowed.