Paytm Moves Nodal Account to Axis Bank as RBI Extends Unit Closure Deadline to March 15

Paytm assures that its QR codes, soundbox, and card machines will maintain regular functionality even after March 15, as confirmed by the company.

India’s Paytm Payments Bank has received an extension from the central bank to wind down its operations, while concurrently securing a new banking partner in a bid to maintain the operation of its popular products amidst its ongoing crisis.

In January, the Reserve Bank of India (RBI) mandated Paytm Payments Bank, an affiliate of One 97 Communications (OCL), commonly known as Paytm, to halt the acceptance of fresh deposits in its accounts or wallets by February 29. However, the RBI announced on Friday that this deadline has been pushed back to March 15.

Paytm stated in a release, “The company (Paytm) has shifted its nodal account to Axis Bank (by opening an escrow account) to continue seamless merchant settlements as before,” highlighting its proactive steps to ensure uninterrupted merchant services.

Paytm further confirmed that its QR codes, soundbox, and card machines will maintain their normal functionality even after March 15.

The regulatory action taken against Paytm Payments Bank stemmed from what RBI officials referred to as ongoing non-compliance with regulations. This week, India’s financial crime investigation agency initiated an examination into the specifics of overseas transactions conducted on the platform.

RBI stated that the extension of the deadline was intended to provide customers, including merchants, with “a little more time” to establish alternative arrangements.

“No further deposits or credit transactions or top-ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, etc after March 15, 2024,” it said.

The regulator said customers can withdraw or use funds from their Paytm Payments Bank accounts and wallets until the time those funds are exhausted but they cannot add any fresh funds after March 15.

Customers who receive their salaries or other transfers including government subsidies into these accounts have to make alternate arrangements by mid-March.

Merchants using Paytm’s QR codes for accepting payments can continue to do so if these QR codes are linked to accounts other than those held by Paytm Payments Bank.

The bank holds nearly a fifth share of India’s toll collections through a product called FASTag. The RBI has clarified that these FASTags will no longer be rechargeable or topped up after March 15.

Vijay Shekhar Sharma, the non-executive chairman of Paytm Payments Bank, has engaged with RBI officials and the finance minister in efforts to advocate against the regulatory actions. However, RBI Governor Shaktikanta Das stated on Monday that there would be no reconsideration of the decision.

One thought on “Paytm Moves Nodal Account to Axis Bank as RBI Extends Unit Closure Deadline to March 15

Leave a Reply

Your email address will not be published. Required fields are marked *