Paytm Payments Bank curbs may have limited impact, shows data

90% of its UPI users have accounts linked with other banks

Around 90 per cent of Paytm UPI app users have their accounts linked with other banks, according to data available with banking industry sources. The data, reviewed by Business Standard, further shows that while Paytm UPI app has approximately 90 million users, some 75 million of them have also installed other UPI apps. That leaves out only 15 million unique users of the Paytm UPI app.

This suggests that the Reserve Bank of India’s (RBI’s) recent decision to stop Paytm Payments Bank from accepting new deposits or conducting credit transactions after February 29 may have a limited impact on the payments ecosystem. In fact, among the Paytm UPI app users, only about 10 per cent have an underlying bank account solely with Paytm Payments Bank. The remaining 80 million users have their accounts with various other banks.

Of the 31.5 million savings accounts, 14 million are either dormant or frozen. Of the 350 million wallets of Paytm PB, which are essentially prepaid payment instruments (PPI), 300 million have zero balance. Only 50 million of these wallets have a balance and have been active in the past year.

Responding to an email query from Business Standard, a Paytm PB spokesperson said: “The information shared by you is completely incorrect. We cannot comment on the same any further as Paytm Payments Bank Limited is under the supervisory engagement of the regulator.”

Paytm Payments Bank has been under regulatory scrutiny for about two years; the RBI barred it from onboarding new customers in March 2022.

According to people in the know, major irregularities were discovered in the KYC process, potentially endangering customers, including depositors. There was lack of KYC in a large number of accounts, PAN validation failures, and notably, there were thousands of cases where a single PAN was linked to over 100 customers, and in some instances, more than a thousand customers.

As for the impact on the merchant side, 70 per cent of those who use Paytm services have their accounts outside Paytm PB. There are about 1 million current accounts with Paytm PB.

While the regulator has prohibited deposits and credit transactions after February 29, it has permitted customers to withdraw or utilise the funds in Paytm PB in the savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc, up to their available balance.

The banking regulator can now either cancel the payments bank licence or supersede the board of the bank and appoint an administrator to reconstruct the bank.