Paytm Payments Bank: What will be the effect of ban on Paytm Payments Bank…read every update – Dainik Savera Times
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New Delhi : Vijay Shekhar Sharma, the son of a school teacher from Uttar Pradesh’s Aligarh district, was impressed that Jack Ma’s Alibaba Group was focusing more on smartphones rather than desktop computers. He later created a digital payments company that gave Indians the option to buy vegetables or cinema tickets or pay electricity and water bills from their mobile phones. After this he planned to create a mobile marketplace, where every kind of goods from matchsticks to iPhones could be bought and sold online. However, now he is facing the biggest crisis of his business life. The Reserve Bank of India (RBI) has directed Paytm Payments Bank to stop most of its business. In such a situation, the company is facing an existential crisis.
Who is the owner of Paytm Payments Bank?
Paytm Payments Bank Limited (PPBL) is a subsidiary of One97 Communications Limited (OCL). One97 Communications holds 49 per cent of the paid-up share capital of PPBL (directly and through its subsidiary). Vijay Shekhar Sharma holds 51 percent stake in the bank.
What does this mean for customers?
Paytm wallet users can continue transactions till February 29. However, after February 29, they will be able to use their existing balance till it is exhausted. Customers will not be able to add any money to the wallet after February 29.
What are the options for users?
Currently, more than 20 banks and non-banking institutions provide wallet services. Prominent among them are Mobikwik, PhonePe, SBI, ICICI Bank, HDFC, Amazon Pay. Similarly, 37 banks like SBI, HDFC, ICICI, IDFC, Airtel Payments Bank provide Fastag service. Customers can recharge Fastag through their bank’s mobile banking, internet banking or third party apps like Google Pay and PhonePe.
Why did it come under the radar of RBI?
The banking regulator was continuously pointing towards irregularities. According to sources, money laundering concerns and suspicious transactions worth hundreds of crores of rupees between popular wallet Paytm and its lesser-known banking arm led the Reserve Bank of India to crack down on Vijay Shekhar Sharma’s entities.
What is the crisis of Paytm Payments Bank?
RBI has directed Paytm Payments Bank Limited not to accept deposits or top-ups in any customer account, prepaid instrument, wallet and Fastag after February 29, 2024. RBI had earlier on March 11, 2022, barred PPBL from adding new customers with immediate effect. Paytm Wallet customers can use it till their balance is exhausted. They will not be able to add money to it after February 29. If RBI does not relent, top-up for Paytm wallet will stop and transactions will not be possible through it.
CAT advises merchants to shift from Paytm to other payment apps
The Confederation of All India Traders (CAIT) has advised merchants to shift from Paytm to other platforms for their business-related transactions. This advice has been given by CAT after the restrictions of Reserve Bank of India on Paytm wallet and bank operations. In a statement issued by CAT, it has been said that due to the recent restrictions imposed on Paytm by the Reserve Bank, merchants across the country should use other platforms to protect their money. CAIT National General Secretary Praveen Khandelwal said that a large number of small traders, vendors, hawkers and women are transacting through Paytm and these people may face financial problems due to RBI restrictions. Sources say that due to money laundering concerns and suspicious transactions worth hundreds of crores of rupees between the popular wallet Paytm and its lesser-known banking unit, the Reserve Bank has imposed this curb on the units led by Vijay Sharma.
Company response
Paytm management has said that PPBL is in discussions with RBI for business continuity and is ready to comply with their directions.
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