Paytm Payments Bank has incurred a penalty of ₹5.49 crore due to breaches in reporting concerning illicit funds channeled through its accounts. This development follows the recent directive from the Reserve Bank of India (RBI), instructing the bank to cease accepting new deposits in its accounts or wallets by February 29, with an extension granted until March 15.
The Financial Intelligence Unit-India (FIU-IND) initiated a review of Paytm Payments Bank based on information provided by law enforcement agencies regarding alleged unlawful activities, including online gambling. According to the FIU-IND, certain entities funneled these funds through Paytm Payments Bank, contravening provisions of the Prevention of Money Laundering Act (PMLA).
A spokesperson for Paytm Payments Bank clarified that the penalty relates to issues stemming from a discontinued business segment two years ago. They emphasized that the bank has since bolstered its monitoring systems and reporting mechanisms to the Financial Intelligence Unit (FIU).
Following the RBI’s directive, Paytm transferred its nodal account to Axis Bank to ensure uninterrupted merchant settlements. The bank assured continued functionality of its QR codes, soundbox, and card machines beyond the March 15 deadline stipulated by the RBI. However, the RBI reiterated that after March 15, no further deposits, credit transactions, or top-ups will be permitted in customer accounts, prepaid instruments, wallets, FASTags, or National Common Mobility Cards.
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Despite Paytm Payments Bank’s significant role in India’s toll collections via FASTag, the RBI clarified that FASTags cannot be recharged or topped up after March 15. Additionally, while customers can withdraw or utilize funds from their Paytm Payments Bank accounts and wallets until exhaustion, they are barred from adding fresh funds post the March 15 deadline.
Paytm remains the third-largest app for UPI payments in India, processing 1.6 billion monthly transactions, as per data from the NPCI website, trailing behind PhonePe and Google Pay.