CAIT Urges Businesses to Shift from Paytm After RBI Imposes Restrictions

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CAIT Urges Businesses to Shift from Paytm After RBI Imposes Restrictions
05 Feb 2024
5 min read

News Synopsis

In response to the recent restrictions imposed by the Reserve Bank of India (RBI) on Paytm's wallet and bank operations, the Confederation of All India Traders (CAIT) has advised traders to explore alternative payment apps for their business transactions.

CAIT expressed concern about the potential financial disruption for a significant number of small traders, vendors, hawkers, and women who heavily rely on Paytm for their payments. The RBI restrictions on Paytm have prompted CAIT to recommend proactive measures to users to safeguard their funds and ensure uninterrupted financial transactions.

CAIT Secretary General Praveen Khandelwal highlighted the growing apprehensions regarding the security and continuity of financial services offered by the Paytm platform. He emphasized the need for traders to act promptly and make informed decisions to mitigate any adverse effects on their financial operations.

According to reports citing sources, the RBI's restrictions on Paytm were prompted by concerns related to money laundering and questionable transactions involving significant sums between Paytm wallet and its less-known banking arm.

The specific restrictions imposed on Paytm include the suspension of most of Paytm Payments Bank Ltd's (PPBL) business activities, such as accepting deposits, conducting credit transactions, and performing top-ups on customer accounts, prepaid instruments, wallets, and cards for toll payments after February 29.

Customers with Paytm wallets will be able to use their existing balance until it is exhausted, but they won't be able to add money after February 29. If the RBI maintains its stance, the top-up for Paytm wallets will be halted, and transactions through it will become impossible.

Paytm Payments Bank Ltd is affiliated with One97 Communications Limited (OCL), where One97 Communications holds 49 percent of the paid-up share capital of PPBL. Vijay Shekhar Sharma, the founder of Paytm, owns a 51 percent stake in the bank.

CAIT's Recommendation Amidst RBI Restrictions on Paytm

Confederation of All India Traders CAIT's advisory to shift from Paytm reflects growing concerns over the impact of RBI restrictions on users and businesses relying on the platform.

RBI's Stringent Measures on Paytm Operations

The RBI's decision to suspend various business activities of Paytm Payments Bank Ltd, including deposits and credit transactions, has raised questions about the platform's compliance and financial practices.

Concerns Over Financial Disruption for Small Traders

CAIT's emphasis on potential financial disruption for small traders, vendors, and hawkers highlights the widespread usage of Paytm in these segments and the importance of swift action.

The Impact on Paytm Wallet Users

With the restrictions on adding money to Paytm wallets after February 29, users may face challenges in conducting transactions through this popular payment method.

Key Points:

  • RBI curbs on Paytm: The RBI has restricted Paytm Payments Bank Ltd (PPBL) from taking deposits, conducting credit transactions, and processing top-ups after February 29th.

  • CAIT's concern: The traders' association is concerned about the security and continuity of financial services offered by Paytm, especially for small businesses and vendors.

  • Potential disruption: CAIT warns that the RBI restrictions could lead to financial disruption for many small businesses and individuals who rely on Paytm.

  • Call to action: CAIT urges businesses to switch to alternative payment platforms to ensure uninterrupted financial transactions.

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