The Reserve Bank of India (RBI) has taken measures against the well known fintech company, Paytm. Starting from February 29th Paytm is no longer allowed to offer a range of banking services to its customers as stated in a notice released on Wednesday.
As per the RBIs directive Paytm is now restricted from providing payment services such as Unified Payments Interface (UPI) Immediate Payment Service (IMPS) Aadhaar enabled payments and bill payment transactions. Additionally the company based in Noida has been instructed to stop accepting deposits, credit transactions or any form of wallet top ups after the mentioned date.
To ensure customer convenience the RBI permits Paytm users to withdraw and use funds until their account balance is depleted. This strict action taken by the banking regulator comes as a result of compliance issues found within the company.
According to the notification from RBI "After conducting an audit and subsequent compliance validation, by external auditors persistent non compliance and continued material supervisory concerns were identified in the bank. This necessitated supervisory action."
It's worth noting that on March 11th, 2022 RBI had already instructed Paytm to stop bringing customers on board.
This development follows Paytms decision to scale down its Buy Now Pay Later (BNPL) service, Paytm Postpaid and take a cautious approach towards providing small ticket loans.
In the quarter of the year One 97 Communications, the parent company of Paytm reported a 43% decrease in net loss to Rs 221.7 crore compared to the previous year. The revenue from operations for the December quarter saw an increase of 38% reaching Rs 2,850.5 crore.
It is important to note that in December One 97 Communications implemented a reduction in their workforce by laying off more than 1,000 employees across different units. This impacted 10% of their total workforce according to ETs report, on December 25th.
—Input from ET