The National Highway Authority of India (NHAI) has removed Paytm Payments Bank from its list of 30 authorised banks for the FASTag service.
The updated list by NHAI includes banks such as Airtel Payments Bank, Allahabad Bank, AU Small Finance Bank, Axis Bank, Bank of Baroda, Bank of Maharashtra, Canara Bank, Central Bank of India, City Union Bank, Cosmos Bank, Equitas Small Finance Bank, Federal Bank, Fino Payments Bank, HDFC Bank, ICICI Bank, IDBI Bank, IDFC First Bank, Indian Bank, Induslnd Bank, J&K Bank, Karnataka Bank, Karur Vysya Bank, Kotak Mahindra Bank, Nagpur Nagarik Sahakari Bank, Punjab National Bank, Saraswat Bank, State Bank of India, Thrissur District Cooperative Bank, UCO Bank, Union Bank of India, and Yes Bank.
The Reserve Bank of India (RBI) on January 31 ordered Paytm Payments Bank, a subsidiary of One 97 Communications, to stop accepting fresh deposits in its accounts and wallets from March. Paytm Payments Bank is 51% owned by Paytm CEO Vijay Shekhar Sharma while the remaining 49% is owned by One 97 Communications.
RBI governor Shaktikanta Das last week said the banking regulator gave ample time to Paytm Payments Bank to comply with regulations and business restrictions were imposed only when the entity did not listen to constructive engagement.
"We give sufficient time to every RE to comply with the requirements. Sometimes it may look more than sufficient. We are a responsible regulator. If everything has been complied with, then why should we act," Das said in RBI's post-policy press conference.
The banking regulator has over the last few years deepened its supervisory systems. "Our emphasis is always on bilateral engagement with RE. We focus on nudging the RE to take corrective action and sufficient time is given," says Das.
"When constructive engagement does not work. We go for imposing business restrictions. Such restrictions are proportional to the gravity of the situation," Das says, emphasising that all actions are in the best interest of systemic stability and depositors' interest.
The supervisory action on Paytm was taken after persistent non-compliance and months and years of bilateral engagement with the company, says RBI deputy governor Swaminathan J.
"We provide more than adequate time to take corrective action. As a regulator, it is incumbent upon us to protect the interest of the ultimate consumer and thereby protecting the stability of the financial system," the deputy governor says, adding that suitable steps will be taken to minimise customer inconvenience.
A Paytm spokesperson said, "We assure our users and merchant partners that the Paytm app remains fully operational, and our services are unaffected. Paytm continues to lead in mobile payments innovation, and we are accelerating our partnerships with banks to offer uninterrupted services. We assure our merchant partners that Paytm QR, Soundbox, and card machines will continue to work as always."
