The Reserve Bank of India (RBI) has ordered the payments bank subsidiary of Paytm to stop accepting fresh deposits in its accounts or popular wallets from March, in a major blow to one of the country's largest payments firms. Paytm shares plunged the daily limit of 20% on Thursday after the central bank's move, which could be a precursor to its licence being cancelled, said a person familiar with the matter. Following are answers to some key questions about Paytm and its payments bank.
Paytm: The Reserve Bank of India (RBI) has instructed Paytm s payments bank subsidiary to cease accepting new deposits, signaling a potential cancellation of its license. Paytm Payments Bank, which operates as a specialized banking entity, cannot offer credit services or facilitate fund transfers after February 29. Paytm has stated it will comply with the RBI s directions and expects an impact of up to INR 5 billion ($36 million) on its annual earnings. The move adds to regulatory concerns surrounding Paytm s business, but liquidity should not be an issue as the bank s deposits are held in government bonds and other banks.
Paytm shares plunged the daily limit of 20% on Thursday after the central bank s move, which could be a precursor to its licence being cancelled, said a person familiar with the matter.