RBI's Big Shock to Paytm Payments Bank: Key Details to Know

RBI has banned Paytm Payments Bank from accepting fresh deposits and making credit transactions. After February 29, no further deposits or credit transactions will be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., except for interest, cashbacks, or refunds that may be credited at any time, as per RBI. Additionally, the bank is prohibited from providing other banking services like fund transfers and UPI facilities after February 29.

Regarding the question of whether customers will receive interest on their balance, RBI clarified that interest, cashback, and refunds can be credited at any time.

Bernstein Research commented that, in practical terms, the RBI notifications effectively end the operations of Paytm payments bank. This development is seen as negative and adds to the already heavy regulatory overhang on the business, according to Bernstein.