The Reserve Bank of India (RBI) has pushed back the deadline for imposing restrictions on Paytm Payments Bank to March 15th.

The Reserve Bank of India (RBI) has granted a 15-day extension to Paytm Payments Bank, a part of One 97 Communications, for halting deposit transactions, allowing customers to deposit funds into their accounts, wallets, FASTags, and prepaid cards until March 15th. This decision aims to accommodate the needs of the bank's consumers and merchants who require more time to make alternative arrangements, with the RBI emphasizing that it's in the public's interest.

On January 31st, the RBI instructed Paytm Payments Bank to cease accepting deposits or top-ups in various customer instruments after February 29th due to significant non-compliance with regulations and supervisory concerns. The central bank specified that no further deposits or credit transactions would be permitted in customer accounts, wallets, FASTags, and other instruments after March 15th, except for interest, cashbacks, partner bank sweeps, or refunds.

Moreover, merchants using Paytm QR codes, Soundbox, or PoS terminals can continue using them post-March 15th if their fund receipts and transfers are linked to a bank account other than Paytm Payments Bank. However, the deadline for closing nodal accounts held by One97 Communications and Paytm Payments Services at Paytm Payments Bank remains unchanged.

One97 Communications Ltd, with a 49% stake in Paytm Payments Bank as of March 31, 2023, utilizes nodal accounts as intermediaries between customers, merchants, and financial entities, holding customer payments before settling them with the merchants.

The RBI clarified that customers can withdraw or utilize balances from their accounts without any restrictions, except for frozen or lien-marked accounts by law enforcement or judicial authorities.

In response, One97 Communications disclosed that it has shifted its nodal account to Axis Bank to ensure seamless merchant settlements, replacing the previous arrangement with Paytm Payments Bank. This transition is facilitated through an escrow account and is expected to maintain continuity in merchant settlements, with Paytm app functionalities and devices remaining operational as usual.

Earlier statements from Amitabh Chaudhary, CEO of Axis Bank, indicated the potential for collaboration with Paytm pending RBI approval.