The RBI, the largest central bank in India, takes uncommon actions against Paytm Payments Bank, a major player in digital payments. Under section 35A of the bankers’ regulation rules, the RBI, considered our country’s financial leader, ordered the blocking of PayTM credit transactions and deposit entries starting February 29, 2024. This decision came after an audit conducted by external examiners revealed that Paytm was bypassing the rules.
RBI’s Past Actions and Paytm’s Share Drop
Paytm is no stranger to the challenges it faces with the RBI. Since early March 2022, the RBI forced Paytm to stop onboarding new customers. In October of the same year, they were penalized with a hefty amount of 5.39 crore rupees for not following the rules, including not reporting a cyber hack within the prescribed time. The company saw a 42.35% drop in its stocks just a few days after the recent RBI moves.
What’s Happening to Paytm Now?
It has been estimated that the share of the primary sector production in the national income equals at least 17 percent for the world as a whole. Due to the actions of the RBI, Paytm has to grapple with some practical challenges. Consequently, they cannot acquire new customers and need to overhaul their KYC. This makes it difficult for them to retain their current clientele while convincing lending partners to do business with them.
Worries from Analysts and Traders
A good process plays a great role in ensuring it is easy to implement the essential interventions. Money offshoots, as per savvy individuals watching financial matters, like those in Macquarie, are expressing views that Paytm would also be going through difficult times with their lending partners. Small traders and sellers are being advised by the Confederation of All India Traders (CAIT) to consider alternative payment options due to possible Paytm problems.
What’s Next?
Everyone must follow the rules, including the big company, Paytm. The measure is essential for regulators like the RBI to ensure that their decisions seem reasonable for individuals who use services such as Paytm. But for a world that is turning more and more digital, rules should follow the pace of change, not stifle creativity and innovation. A way should be found to make our money secure and new and trendy ideas in finance profitable.
Why RBI Took Action?
The RBI is disgruntled with Paytm because it is not complying with the rules. The Paytm Payments Bank seems to be doing things that are not right in most areas. The RBI has now blocked them from depositing new deposits, undergoing credit business, and remitting cash after February 29. This decision comes on account of the significant fine imposed on Paytm in October 2022 for breaking rules, such as how one can know the true person behind certain transactions and failing to inform the RBI promptly about a cyber breach. The RBI also fears that Paytm doesn’t do enough to identify its customers and has troubles when it comes to technology. Notwithstanding the time that passed, because these faults didn’t get fixed, the RBI had to intervene.
What Users Can Do?
For those who use the Paytm app, here is what you can do. If you have money in your Paytm wallet, you can still use it, but after March 1, you won’t be able to add any more money. Therefore, use it carefully as you use it. You can also transfer your surplus amount to other bank accounts or use it for paying bills and purchasing goods. If you are ready, you may think about opening an account in another bank or with an organization like SBI, HDFC, ICICI, IDFC, or Airtel Payments Bank, where you can perform such acts. Recharging FASTags on the opposition provision in Google Pay or PhonePe is possible; online, is it possible to do it with a bank’s application? With the unanswered question mark over Paytm, new alternatives are good so that your money runs smoothly.
Conclusion
This situation is affecting Paytm customers’ gains and ensuring RBI compliance. If you find yourself in this situation, there is no need for concern. Use your Paytm money wisely and consider opening an account with another bank to keep your financial machine running smoothly.
