In a significant move, the Reserve Bank of India (RBI) has directed Paytm Payments Bank (PPBL) to cease accepting deposits and top-ups in any customer accounts, including wallets and FASTags, after February 29. This action follows an audit report and compliance validation by external auditors.
While the RBI’s directive primarily impacts Paytm’s banking operations, customers can continue to use Paytm for digital payments as long as their accounts are connected to external banks.
Explaining the decision, an RBI statement noted, “No further deposits or credit transactions or top-ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime.”
FASTag, a crucial component of India’s electronic toll collection system mandated by the government for four-wheeler vehicles, operates through Radio Frequency Identification (RFID) technology and prepaid wallets managed by the National Highways Authority of India (NHAI).
Regarding the impact on FASTag users, the RBI has permitted Paytm FASTag customers to utilize their existing balances but prohibits further loading of funds into these instruments starting March 1.
This development marks a significant regulatory intervention in the operations of a prominent player in India’s digital payment ecosystem, affecting millions of users who rely on Paytm’s services for various financial transactions.