India’s central bank has extended the deadline for some business restrictions on Paytm’s Payments Bank to March 15 in “larger public interest,” dashing hopes of any major concessions but allowing extra time to comply.
The Reserve Bank of India (RBI) said on Friday that Paytm Payments Bank will be barred from accepting deposits and facilitating credit transactions from March 15. The order initially had set a deadline of February 29.
The extension follows curbs last month that wiped 55% from Paytm’s market cap, which floated in 2021 at a $20 billion valuation. The fintech serves over 15 million merchants and 330 million wallet customers. Its cash reserves stood at over $1 billion at the end of December.
The RBI said in a statement that it was extending the deadline in the “interest of customers (including merchants) of PPBL who may require a little more time to make alternative arrangements and the larger public interest.”
Many other payments bank’s services will be permitted until March 15 instead of the earlier February 29 deadline, the central bank said (PDF). The RBI also published an FAQ (PDF), detailing how the embargo on Paytm’s Payments Bank will impact merchant and customers. The central bank said merchants using Paytm’s QR code, soundbox and point-of-sale terminal devices will not be impacted by the disruption at Paytm, provided those machines and instruments are linked to other bank accounts.
Paytm QR, Soundbox and EDC (card machine) will continue to work like always, even after March 15.
The latest FAQ issued by RBI on point #21 clarifies it unambiguously.
Do not fall for any rumour or let anyone deter you to championing Digital India ! https://t.co/ts5Vqmr6qh
— Vijay Shekhar Sharma (@vijayshekhar) February 16, 2024
Last month the RBI ordered Paytm to close nodal accounts by February 29. It is maintaining this deadline – payments firms use such accounts to enable transactions. Earlier, Paytm said it would instead tap other banks’ accounts.
Earlier this week, Macquarie slashed its Paytm price target to 275 rupees, or $4.11, over regulatory risks, sparking fears customers could exit. Shares closed Friday at 341 rupees.
The RBI has not disclosed Paytm’s violations, but said last week it only acts after “persistent non-compliance.” Governor Shaktikanta Das stated the bank engages bilaterally first to push corrective action. Any response is “proportionate to the gravity.”
Many hoped the RBI would soften its stance, but Friday’s update suggests it plans to proceed.