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The Reserve Bank of India (RBI) has imposed a ban on Paytm Payments Bank, operated by One 97 Communications, citing “non-compliance and continued material supervisory concerns in the bank.” This regulatory action will have various implications for Paytm users, affecting certain services while sparing others. Let’s explore what will work and what will not for Paytm users in light of this RBI ban.

Services that Will Continue to Work:

FASTags:

FASTags issued by Paytm Payments Bank will remain functional.

Users can continue utilizing existing balances in their FASTag wallet and through third-party banks post the nodal transfer.

UPI on Paytm App:

Paytm users can still use the Paytm app and Paytm UPI without any restrictions.

Offline Merchant Network:

Services like Paytm QR, Paytm Soundbox, and Paytm Card Machine for offline merchants will continue unaffected.

Onboarding of new offline merchants will proceed as usual.

User Deposits Safety:

Deposits in savings accounts, wallets, FASTags, and National Common Mobility Card (NCMC) accounts are secure.

Customers can continue utilizing existing balances without disruption.

Online Merchant Services:

The Payment Gateway business for online merchants will continue providing payment solutions to existing merchants.

Services that Will Cease to Operate:

Partnership with PPBL:

Paytm will no longer collaborate with Paytm Payments Bank Limited (PPBL).

Plans to establish partnerships with other banks will be accelerated.

Onboarding of New Customers:

PPBL will be restricted from onboarding new customers or opening new accounts.

Paytm App/Wallet Linked to PPBL:

Paytm app/wallet linked to Paytm Payments Banks will become non-functional after February 29.

Beneficiaries can only withdraw or transfer funds from their wallet or account after this date.

Financial Services (Loan, Insurance, Equity Broking):

Services like loan distribution, insurance distribution, and equity broking, while not directly related to the associate bank, are expected to remain unaffected.

PPBL Nodal Account Termination:

The directive to terminate the nodal account of OCL and PPSL by February 29, 2024, will prompt the migration of the nodal account to other banks during this period.

Conclusion: The RBI ban on Paytm Payments Bank will bring about a mix of operational continuity and disruptions for Paytm users. While some essential services will remain unaffected, others tied to the partnership with PPBL and customer onboarding will face restrictions. Users are advised to stay informed about the evolving situation and any updates from Paytm regarding the transition of services and partnerships to other banks.

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