Paytm Payments Bank's Loss of Licence May Disrupt EMI, SIP, and OTT Subscription Payments

RBI Cancels Paytm Payments Bank Licence, Impacting Auto-Payments and Subscriptions

The Reserve Bank of India (RBI) has cancelled the licence of Paytm Payments Bank Limited (PPBL), which could disrupt auto-payments linked to the account. Subscriptions, loan Equated Monthly Instalments (EMIs), Systematic Transfer Plans (SIPs), and utility bills may fail because the bank can no longer operate. However, this does not mean that depositors' money is lost.

PPBL has stated that all balances in its savings accounts, current accounts, prepaid instruments, wallets, FASTags, NCMC cards, and other deposit instruments are fully secure. The bank will communicate further steps in due course. Depositors are expected to get their money back through an organised payout process overseen by the regulator and a liquidator. The process involves verifying all account balances, asking customers to provide or confirm a valid bank account outside Paytm Payments Bank, and then transferring the funds.

Comparison of Key Actions by RBI Against PPBL

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The RBI has clarified that the bank has sufficient liquidity to repay all depositors in full. This means that depositors' money is safe and will be returned through the formal winding-up process. Paytm has stated that this action relates only to PPBL, and its app, UPI, and other services continue unaffected.

The winding-up process involves the formal closure of a bank under the supervision of the regulator and a court-appointed liquidator. In this process, the bank halts normal operations, its assets are collected and sold, and the proceeds are used to repay customers and other creditors in a fixed order of priority.

Impact on Auto-Pay, Subscriptions, and EMIs

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

All EMIs, auto-pay mandates, and subscriptions linked directly to PPBL accounts will stop working and will be handled as part of the bank's winding-up process. However, if you are using Paytm UPI app but the funds are linked to another bank account, those payments will continue normally. Experts suggest that users must quickly shift mandates to another bank account to avoid payment failures and financial disruptions.

For most users, the practical step is to move balances and shift banking activity to another account. This is a good moment to check balances, update mandates, and diversify banking relationships to avoid concentration.