RBI Bars Paytm Payments Bank, but UPI Payments and Wallet Continue Unaffected.
For Paytm Users
All UPI Payments will keep working: Users can continue to make UPI payments through the Paytm app without any interruption.
Paytm Wallet will keep working: Users can still use their Paytm wallet for making transactions and payments.
Fastag will keep working: Users can continue to use Paytm Fastag for seamless toll payments.
All bookings will continue to work seamlessly: Users can make bookings for flights, hotels, movies, and other services through Paytm without any issues.
Paytm QR, Paytm Soundbox, Paytm Card Machine, all Paytm gadgets will continue to work: Users can use all Paytm devices and gadgets for accepting and making payments.
Problem Area
Paytm has its own Paytm Payments Bank, which allows customers to open accounts and keep their money in the digital bank. However, RBI has found supervisory issues in the top management and functioning of Paytm Payments Bank. As a result, RBI has decided to stop the services of Paytm Payments Bank from 1st March, with 29th Feb 2024 being the last date.
Customers who have accounts with Paytm Payments Bank should be concerned and move their money and accounts to other banks.
Clarification from Paytm:
Paytm has clarified that it will soon tie up with other banks to solve the banking issue.
RBI has also allowed the withdrawal of money from Paytm Payments Bank after 1st March.
There is a lot of misinformation about the development, particularly regarding two main concerns:
1. Are mutual fund investments via Paytm at risk? Will SIPs be affected?
No, mutual fund investments made through Paytm are done via a separate company called Paytm Money, which is regulated by SEBI and not RBI. Therefore, they are not affected by the issues with Paytm Payments Bank.
2. Will UPI via Paytm stop?
No, UPI transactions through Paytm will not stop. The UPI transactions are facilitated through backend partnerships with certain banks. Although Paytm Payments Bank has been barred from conducting UPI transactions, Paytm can switch its backend banking partner to ensure continuity of UPI payments through the app.
Users can recall that when Yes Bank collapsed, PhonePe onboarded ICICI Bank in less than 18 hours. Similarly, Paytm can switch its backend banking partner with relative ease.
Therefore, Paytm users can have peace of mind knowing that their UPI payments and wallet services will continue without interruption. The issue primarily affects customers with accounts in Paytm Payments Bank, and they are advised to take necessary steps to transfer their funds to other banks.
