 "Paytm")
One97 Communications (OCL), which operates the brand Paytm, announced on Friday that it has shifted its nodal account to Axis Bank from Paytm Payments Bank to ensure continuity and seamless merchant settlements after the Reserve Bank of India (RBI) ordered its termination by February 29.
In an exchange filing, the company said its new arrangement with Axis Bank will replace the nodal account used by OCL. A nodal account is a bank account opened by intermediaries and it is utilised to hold funds on behalf of customers and vendors.
Paytm Payment Services Ltd (PPSL), the company’s wholly-owned subsidiary, has already been using Axis Bank services since inception, OCL informed the exchanges.
“We are committed to providing seamless service to our merchant partners, with a focus on compliance and regulatory guidelines. We assure our users that the Paytm app, and our pioneering devices like Paytm QR, soundbox, card machine will continue to work as always. The shift of the nodal account to Axis Bank (by opening an Escrow Account) will ensure seamless merchant settlements as before,” OCL said in a statement.
This will provide get flow of money by way of nodal account and enhance balances, said an Axis Bank official.
The banking regulator had ordered the termination of the nodal accounts of OCL and PPSL maintained by Paytm Payments Bank by February 29 this year. The RBI had cited “persistent non-compliances” and “continued material supervisory concerns” in the bank, prompting it to take action against Paytm Payments Bank.
The central bank on Friday extended the deadline till March 15 this year for the payments bank to stop accepting new deposits or conducting credit transactions.
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In an FAQ (frequently asked questions) issued by the RBI, the regulator explained that merchants can accept payments using Paytm’s QR code, soundbox or point-of-sale (POS) terminals even after March 15, 2024 if their account is linked to bank accounts or other than Paytm Payments Bank. It, however, noted that the merchants using the company’s QR, soundbox, or POS terminals linked to Paytm Payments Bank will be unable to receive any credit other than refunds or cashbacks.
“In order to avoid any inconvenience or disruption, it is suggested that you [merchants] may obtain a fresh QR code linked to an account with another bank or wallet to receive payments. You [merchants] may also change your bank account details (in which you receive payments) through your service provider,” RBI said in the FAQ.
Paytm has over 10.6 million soundboxes and POS devices deployed in the market, according to the company’s earnings presentation for the third quarter of the financial year 2024 (Q3FY24).
