The RBI has imposed sanctions on the Paytm Payments Bank, banning it from accepting deposits or top-ups. This move could affect the crypto market in India, as Paytm is a popular mode of payment for crypto purchases. Crypto users may have to look for alternative payment methods and banks.
The Paytm Payments Bank, a subsidiary of One 97 Communications Limited (OCL), has faced a regulatory crackdown from the Reserve Bank of India (RBI). The RBI has imposed several sanctions on the Paytm Payments Bank, citing regulatory concerns and non-compliance.
On January 31, the RBI announced a ban on accepting deposits or top-ups to the Paytm Payments Bank and its linked services, such as Paytm Wallet and Paytm Payments Bank Debit Card. The regulatory action is attributed to “persistent non-compliance and continued material supervisory concerns” under Section 35A of the Banking Regulation Act, 1949.
This move, affecting millions of users, underscores the gravity of the concerns raised by the RBI.
The Paytm Payments Bank is a digital bank that offers savings accounts, current accounts, debit cards, and other financial services to its customers. It is also integrated with the Paytm Wallet, a mobile payment app that allows users to pay for various goods and services, including crypto purchases.
Paytm Payments Bank Ban May Impact Crypto Market in India
The Paytm Payments Bank ban could seriously impact the crypto market in India, as Paytm is a popular mode of payment for digital asset transactions in the country. Many crypto users rely on Paytm to make payments on various verified crypto exchanges in India, such as WazirX, CoinDCX, and ZebPay.
However, the recent clampdown on the Paytm Payments Bank could complicate the process for crypto purchases. Since people would not be able to add deposits to their bank accounts after February 29, they would have to resort to the limit of their existing balance if they chose to invest in crypto.
Shedding light on the matter, Keyur Rohit, a crypto influencer, stated that the situation for the crypto community would worsen due to this development. He acknowledged the concerns of the Web3 community, as Paytm serves as a major payment solution for crypto investors.
The crypto influencer explained,
“With Paytm’s banking services suspended, crypto users may need to explore other payment methods, potentially affecting the efficiency of transactions.”
After the ban, those using the Paytm Payments Bank to make crypto purchases would have to explore other options on the platform, such as UPI.
UPI is a unified payment interface that allows users to transfer money between different bank accounts using a mobile app. However, UPI also has its limitations and challenges, such as transaction limits, network issues, and regulatory uncertainty.
In addition, crypto users may also have to explore other banking service providers to combat the fund deposit restriction in Paytm Bank. Moreover, crypto users would have to consider factors such as the bank’s compatibility with the crypto exchanges concerned, reliability, charges, etc. It would be a hectic task for those who have been relying on the Paytm Payments Bank for crypto transactions.
Paytm Payments Bank Ban Affects OCL Stock and Users
The Paytm Payments Bank ban will come into effect after February 29, marking a setback for Paytm and its users.
Furthermore, it is essential to note that the OCL stock plunged 36% after the RBI published the notification. This escalated the losses after the stock’s IPO, as it is down nearly 70% since inception.
Shortly after the sanctions were announced, OCL responded by revealing plans to strengthen its ties with leading third-party banks. OCL aims to navigate the ban’s impact by expanding collaborations to distribute payments and financial services products.
OCL also assured its users that their money and data are safe and secure and that they can continue to use other services on the Paytm platform.
However, some users have expressed their dissatisfaction and frustration with the Paytm Payments Bank ban and have threatened to switch to other platforms or banks. Some users have also raised questions and doubts about the regulatory environment and the future of the crypto industry in India.