Amid RBI's clampdown, EPFO to halt Paytm Payments Bank linked claims

Paytm crisis: The Employees' Provident Fund Organisation will stop accepting claims made via the Paytm Payments Bank accounts from February 23

The Employees' Provident Fund Organisation (EPFO), on Thursday, directed its officers to refrain from accepting claims linked with accounts in Paytm Payments Bank, days after the Reserve Bank of India (RBI) action on fintech.

The state-run social security fund will stop accepting claims made via the Paytm Payments Bank accounts starting February 23.

RBI's action on Paytm Payments Bank

Last Wednesday, the Paytm Payments Banks (PPB) was asked by the RBI to wind up most of its business by the end of February due to KYC violations. The RBI prohibited Paytm's affiliate business from accepting any further deposits or, conducting credit transactions or carrying out top-ups on any customer's accounts, prepaid instruments, wallets, and cards for paying road tolls after February 29.

The EPFO is a retirement fund body that operates under the Ministry of Labour and Employment. It allowed Paytm Payments Bank to settle claims in November 2023.

The agency covers about 300 million workers and has a corpus of $216.89 billion.

RBI's clarification on Paytm wallet

Since the RBI's directive, Paytm shares have taken a hit, and several merchants operating on it have started switching to other options amid the frenzy over the future of the popular fintech.

Notably, on Thursday, the RBI clarified that its action will not impact the Paytm application.

"Just one clarification, this particular action is against Paytm Payments Bank and not to be confused with Paytm App...App is not impacted by this action," RBI Deputy Governor Swaminathan J said in the media interaction after the bi-monthly Monetary Policy Committee (MPC) meeting.

One of the most looked-up queries is whether the customers will be able to use the Paytm wallet after the February 29 deadline. It's one of the most popular features of FinTech that allows cashless, hassle-free, quick transactions.

On the question of whether other banks can partner with the Paytm wallet, Swaminathan noted it is a business decision, and they have to carry out required due diligence as per their board-approved policy.

(With inputs from agencies)