After the Reserve Bank of India (RBI) cracked down against Paytm Payments Bank and its regulatory violations, traders’ body CAIT issued a cautionary advice to Paytm users, urging them to switch to other payment apps.
The Confederation of All India Traders (CAIT) said in a statement that traders are advised to use payment platforms other than Paytm for business-related transactions as RBI has sounded an alarm about several risks in Paytm Payments Bank due to KYC violations.
In a statement, CAIT said, “The Reserve Bank of India has imposed certain restrictions, prompting CAIT to recommend that users take proactive measures to protect their funds and ensure uninterrupted financial transactions. Large number of small traders, vendors, hawkers and women are making payments through Paytm and as such RBI restrictions on Paytm could lead financial disruption to these people.”
CAIT Secretary General Praveen Khandelwal said that the recent restrictions imposed by RBI on Paytm have raised concerns about the security and continuity of financial services provided by the platform.
He emphasised the urgency of this advisory, urging traders to act promptly and make informed decisions to mitigate any potential adverse effects on their financial operations.
Earlier, Paytm founder Vijay Shekhar Sharma had emphasised that RBI’s notice against Paytm Payments Bank will not impact the business of Paytm app, as the two are separate entities.
Sharma had said that Paytm will continue to function normally even after the February 29 deadline imposed by the RBI. However, it is speculated that RBI can permanently suspend the workings of Paytm Payments Bank after this deadline.
RBI’s concerns against Paytm Payments Bank
This advisory by CAIT comes shortly after RBI issued a notice to Vijay Shekhar Sharma-led Paytm Payments Bank, raising concerns regarding money laundering as the bank failed to meet with the regulator’s norms for KYC of customers.
The central bank has ordered Paytm Payments Bank Ltd (PPBL) to halt most of its business including taking further deposits, conducting credit transactions and carrying out top-ups on any customer accounts, prepaid instruments, wallets, and cards for paying road tolls after February 29.
This means customers can access their existing deposits and pay for services with money stored in their wallets till February 29. And in case, RBI does not relent, top-up for Paytm wallet will stop and transactions through it would no longer can be carried.
(With inputs from PTI)