India’s central bank has extended the deadline for some business restrictions on payments bank Paytm until March 15 in the “broader public interest”, dashing hopes of major concessions but granting additional time to comply .
The Reserve Bank of India (RBI) on Friday said Paytm Payments Bank would no longer be allowed to accept deposits and facilitate credit transactions from March 15. The order initially set the deadline for February 29.
The expansion follows last month’s restrictions that erased 55% of Paytm’s market capitalization, which floated in 2021 at a valuation of $20 billion. The fintech serves more than 15 million merchants and 330 million wallet customers. Its cash reserves stood at more than $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 traders) of PPBL who may require additional time to make alternative arrangements and in the public interest wider”.
Many other payment bank services will be allowed until March 15 instead of the February 29 deadline, the central bank said (PDF). The RBI has also released an FAQ (PDF), detailing the impact of the embargo on payments bank Paytm on merchants and customers. The central bank said merchants using Paytm’s QR code, sound box and point-of-sale terminals will not be affected by the disruption at Paytm, provided these machines and instruments are linked to other accounts banking.
Last month, the RBI ordered Paytm to close its nodal accounts by February 29. It maintains this delay – payment companies use these accounts to enable transactions. Paytm on Friday announced that it has transferred its nodal account to Axis Bank. “This arrangement is expected to seamlessly replace the nodal account that OCL was using with Paytm Payments Bank. Paytm Payment Services Ltd (PPSL), the wholly owned subsidiary of OCL, has already been using the services of Axis Bank since its inception,” Paytm said.
Earlier this week, Macquarie cut its Paytm price target to 275 rupees, or $4.11, due to regulatory risks, sparking fears that customers would walk away. The shares closed at Rs 341 on Friday.
The RBI has not disclosed Paytm’s violations, but said last week it only acted after “persistent non-compliance”. Governor Shaktikanta Das said the bank is first engaging bilaterally to promote remedial measures. Any response is “proportional to gravity”.
Many had hoped the RBI would soften its stance, but Friday’s update suggests it is considering moving forward.
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