EPFO restricts deposits into Paytm Payments Bank

The Reserve Bank of India (RBI) on January 31 directed Paytm Payments Bank to stop all forms of banking services — including accepting deposits and processing of payments — effective February 29, 2024. In response to this, the Employees’ Provident Fund Organisation (EPFO) has put restrictions on deposits and credit transactions of subriber’s EPF accounts held in Paytm Payments Bank accounts.

In a circular dated February 8, 2024, the EPFO advised all its Field Offices to refrain from accepting claims associated with bank accounts in Paytm Payment Bank Limited with effect from February 23, 2024.

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In fact, it was only last year that the EPFO had directed its banking section to allow EPF payments to be made in Paytm Payment Bankand Airtel Payments Bank accounts.

The Paytm saga

This is what the RBI circular on Paytm Payments Bank stated:

No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime.

Withdrawal or utilisation of balances by its customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, upto their available balance.

No other banking services, other than those referred in (ii) above, like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after February 29, 2024.

The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated at the earliest, in any case not later than February 29, 2024.

Settlement of all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024 and no further transactions shall be permitted thereafter.

Why this action was taken by RBI

As per the RBI press release, “The Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action.”

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Harry Byrne

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