EPFO blocks Paytm Payments Bank following RBI restrictions

PTC News Desk: In the latest development, the Employees' Provident Fund Organisation (EPFO) has decided to cease acceptance of claims associated with Paytm Payments Bank, adding to the woes of the digital payment platform. The EPFO, an entity managing a substantial corpus of over 18 trillion rupees and catering to nearly 30 crore workers, had previously allowed the settlement of claims through Paytm Payments Bank back in November.

In a circular issued on Thursday, under the purview of the Ministry of Labour and Employment, the EPFO directed its field officers to refrain from accepting claims linked to bank accounts in Paytm Payments Bank effective February 23, 2024. The circular further emphasised the need for extensive awareness campaigns to inform stakeholders about this change.

This move by the EPFO comes on the heels of the Reserve Bank of India's (RBI) directive to Paytm Payments Bank to halt acceptance of all deposits post-February 29. The RBI's directive, issued a week prior, mandated the cessation of further deposits, credit transactions, or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after the specified date. The only exceptions to this directive are interest payments, cashbacks, or refunds that may be credited subsequently.

The EPFO's decision to block claims associated with Paytm Payments Bank underscores the growing regulatory scrutiny surrounding the digital payment platform following the RBI's restrictions.

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RBI takes action due to persistent non-compliance

In response to its recent action against Paytm Payments Bank, the Reserve Bank of India (RBI) clarified that the decision was prompted by "persistent non-compliance" on the part of the entity. RBI Governor Shaktikanta Das emphasised that sufficient time is provided to all entities for compliance, and actions are taken only when necessary. He stated, "If they would comply, why would a regulator like us have to take action?"

Furthermore, the central bank clarified that the action specifically targets Paytm Payments Bank and does not affect the Paytm app. RBI Deputy Governor Swaminathan J reiterated this distinction, reassuring users that the app remains unaffected by the regulatory measures. Responding to concerns surrounding Paytm Payments Bank Limited (PPBL), Das acknowledged the public's queries and announced that the RBI will release a detailed FAQ (frequently asked questions) to address these concerns in the coming week.

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(Inputs from agencies)

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