What action has been taken by RBI?
The Reserve Bank of India (RBI) has placed certain restrictions on Paytm Payments Bank. After 29th February 2024, it won't be able to take deposits or add money to customer accounts, wallets, FASTags, etc.
However, customers can still get interest, refunds, etc., in these accounts, which they can use for withdrawals or spending. Some banking services won't be available after 29th February. Because of these rules, Paytm Payments Bank might stop working soon.
How will this affect the customers?
Starting 29th February 2024, customers won't be able to add money to their Paytm wallet or FASTag accounts linked to the payment bank. Customers can use up their remaining balances.
Using the Paytm app won't be affected because it's owned by the parent company of the payment bank (One 97 Communications). The app will still support UPI transactions not connected to Paytm Payments Bank.
Customers can still transfer money from their wallets and bank accounts, but they won't be able to receive money starting 1st March 2024. Only the functions of Paytm Payments Bank will be stopped, while Paytm will continue working with other banks.
What’s the reason for RBI’s action against Paytm Payments Bank?
The RBI took action against Paytm Payments Bank because it didn't follow various rules. A new report says many accounts were opened without checking IDs. The RBI thinks these accounts might have been used for money laundering.
The RBI has passed this information to the government, and it will be checked.
What are Paytm Payments Bank’s responses to the allegations?
Paytm said they are not involved in money laundering. Vijay Shekhar Sharma, Paytm’s CEO, has assured customers that the Paytm app will continue working after 29th February 2024.
So, what are UPI and wallets?
UPI is a mobile payment technique that allows a person to transfer payments between bank accounts immediately. It was started in 2016. When transferring money through UPI, each user is required to have a unique ID, known as the UPI ID.
It's like a special ID for one’s bank account; it helps send money to anyone with a bank account. One can also use a UPI app to send money by scanning a QR code. It also allows us to transfer money from our bank account linked to our mobile number.
A digital wallet is like a digital version of your real wallet. Instead of carrying cash and cards, one can keep one’s money online in this digital wallet. The wallet can be accessed through an app or online platform. Someone can use the money in their digital wallet to pay for things or send money to others.
