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ARTICLE · 22 FEBRUARY 2024

RBI's Master Directions On Prepaid Payment Instruments Post Paytm Restrictions

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In a significant move, the Reserve Bank of India (RBI) has recently imposed strict restrictions on Paytm Payments Bank, raising concerns about regulatory compliance and breaches of norms.

IndiaFinance and Banking
Rupin Chopra
Rupin Chopra
Shantam Sharma
Shantam Sharma
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Introduction:

In a significant move, the Reserve Bank of India (RBI) has recently imposed strict restrictions[1] on Paytm Payments Bank, raising concerns about regulatory compliance and breaches of norms. Effective from March 2024, these restrictions not only impact Paytm but also bring to the forefront the regulatory framework governing Prepaid Payment Instruments (PPIs) in India. This article aims to explore the Master Directions on PPIs[2] issued by the RBI in 2021, shedding light on the broader context and implications for the digital payment landscape.

The Paytm Saga:

The RBI's action against Paytm Payments Bank encompasses five key restrictions[3], prohibiting the acceptance of deposits, credit transactions, and top-ups in customer accounts, prepaid instruments, wallets, FASTags, and National Common Mobility Cards after February 29, 2024. While interest, cashbacks, and refunds may still be credited, the accounts will be limited to withdrawals

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