Paytm partners with Axis Bank to settle merchant payments amid RBI crackdown against payments bank
Amid the Paytm Payments Bank crisis, fintech company Paytm has decided to sign a partnership deal with Axis Bank to initiate the smooth settlement of merchant transactions. One97 Communications.
Which is the parent company of Paytm, has shifted its nodal account to Axis Bank from Paytm Payments Bank. This move will allow continuity of Paytm QR, Soundbox, card machine after the March 15 set by the Reserve Bank of India (RBI), as per a regulatory filing by the company.
This comes after RBI advised all merchants and customers to shift their accounts from Paytm Payments Bank to other banks before the March 15 deadline. The deadline for the payments bank was extended by 15 more days to close most of its operations, including deposit and credit transactions.
In its regulatory filing, Paytm said, “The company has also shifted its nodal account to Axis Bank (by opening an escrow account) to continue seamless merchant settlements as before.”
“This arrangement is expected to seamlessly replace the nodal account that OCL was using with Paytm Payments Bank. Paytm Payment Services Ltd (PPSL), OCL’s wholly owned subsidiary has already been using the Axis Bank services since its inception,” it further said.
Notably, Paytm’s nodal account is its master account where all the transactions by customers and merchants are settled. RBI also clarified that Paytm QR code, Paytm Soundbox or Paytm POS terminal will continue to work after March 15 if it is linked to other banks instead of PPBL.
This comes weeks after the Financial Intelligence Unit (FIU) submitted a report to RBI pointing that there are KYC irregularities in thousands of accounts linked with Paytm Payments Bank, giving rise to money laundering concerns.
RBI extends deadline for Paytm Payments Bank
The Reserve Bank of India on Friday advised all the customers and merchants of PPBL to shift their business to other banks by March 15. Earlier, the deadline issued by the regulatory body was February 29.
The RBI also said withdrawal or utilisation of balances by PPBL customers from their accounts, including saving bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards will be permitted without any restrictions, up to their available balance even beyond March 15.
After this deadline, customers and merchants will not be able to make transactions or deposit money into their Paytm Payments Bank accounts, RBI said.