Paytm Appoints Group Advisory Committee Headed by Former SEBI Chief M. Damodaran

On Friday, February 9, the board of Paytm’s parent company, One-97 Communications (OCL), formed a group advisory committee. The company announced that to strengthen compliance and regulatory oversight, it would work with the board to establish a group advisory committee.

M. Damodaran, former chairman of SEBI, will chair this committee. The committee will include experienced professionals like Mukund Manohar Chitale, a former president of the Institute of Chartered Accountants of India (ICAI), who has also been nominated by the RBI.

Chitale is also a former member of the National Advisory Committee on Accounting Standards (NACAS). Additionally, banking experts like R. Ramachandran, former chairman and managing director of Andhra Bank, will be part of the panel.

On January 31, RBI imposed a ban on Paytm Payments Bank due to non-compliance with prudential regulations. RBI has taken strict measures against Paytm Payments Bank due to significant non-compliances in its Know Your Customer (KYC) processes and validation of PAN for lakhs of accounts. Many times, incorrect information was provided by banks to RBI. RBI also found a large number of inactive accounts.

Highlights of RBI’s order against Paytm:

• After February 29, funds cannot be deposited into Paytm Payment Bank accounts. Deposits cannot be made into wallets, prepaid services, Fastag, and other services. However, interest, cashback, and refunds can still be credited to the account at any time.
• There are no restrictions on withdrawing or using funds from customers’ savings accounts, current accounts, prepaid instruments, Fastag, National Common Mobility Card, etc. Balance will not be available until then but can still be utilized.
• Apart from the mentioned services, Paytm Payments Bank will not be allowed to offer any banking services after February 29, 2024. UPI services will also be discontinued after February 29.
• Nodal accounts of One97 Communications and Paytm Payment Services will be closed by February 29, 2024. Pipeline and nodal account transactions must be completed by March 15, 2024. No further transactions will be allowed after that.
• Paytm has requested an extension of the deadline set by RBI to increase the limit on February 29. Paytm has urged RBI to extend the deadline for the ban imposed on Paytm Payment Bank beyond February 29. Along with this, the company has sought clarity on the status of licenses transfer in the wallet business and Fastag.