[ad_1]
Paytm parent fintech firm One97 Communications has shifted its nodal account to Axis Bank from Paytm Payments Bank. As per a regulatory filing (seen by PTI), this move will allow the company to continue operating Paytm QR, Soundbox, card machines after the March 15 deadline set by the Reserve Bank of India (RBI).
Earlier, the RBI advised customers and merchants of Paytm Payments Bank Ltd (PPBL) to shift their accounts to other banks by March 15. This offered 15 more days to the crisis-affected entity to close most of its operations, including deposit and credit transactions.
Paytm Payment Services Ltd (PPSL) was earlier maintained by PPBL. Recently, the RBI terminated the bank’s license as the central bank found “persistent non-compliances” and “continued material supervisory concerns” within the bank. It’s important to note that PPSL, OCL’s wholly-owned subsidiary, has been using the Axis Bank services since its inception.
As per the RBI mandate, the intermediaries receiving online payments need to collect the money in a nodal account and payments to the seller happen from this account without delay.
What Paytm has to say
In a statement to IANS, Paytm spokesperson said: “The shift of the nodal account to Axis Bank (by opening an Escrow Account) will ensure seamless merchant settlements as before. We strive to continue to empower Indians, contributing significantly to the country’s financial inclusion journey.”
What is a nodal account and an escrow account
Nodal account is a special purpose account created for receiving funds from participating banks and remitting to specific merchants. These accounts are created as per the nodal account guidelines issued by the RBI.
Meanwhile, an escrow account in India is a bank account with conditions on ownership of funds. Simply put, an escrow account is like a safe house for assets while the transaction process is still ongoing.
The RBI said: “In case there is a need to shift the escrow account from one bank to another, the same may be effected in a time-bound manner without unduly impacting the payment cycle to the merchants. The migration should be completed in the minimum possible time and with the prior approval of RBI.”
The balance in the escrow account has to be higher than the value of outstanding prepaid payment instruments (PPIs) and payments due to merchants.
“The amount so maintained in the escrow account shall be used only for making payments to the participating merchant establishments and other permitted payments,” RBI added.
What it means for users
A change in the nodal account is expected to allow Paytm merchants to continue accepting digital payments through the Paytm QR code or card machine.
It’s important to note that Paytm has over 30 crore users, with around 11 crore monthly transacting users. The company also has a network of around 1 crore merchants actively accepting payments.
The company has reassured its users that its mobile app, including the QR code, Soundbox and Card Machine will remain operational even after March 15.
Earlier, the RBI advised customers and merchants of Paytm Payments Bank Ltd (PPBL) to shift their accounts to other banks by March 15. This offered 15 more days to the crisis-affected entity to close most of its operations, including deposit and credit transactions.
Paytm Payment Services Ltd (PPSL) was earlier maintained by PPBL. Recently, the RBI terminated the bank’s license as the central bank found “persistent non-compliances” and “continued material supervisory concerns” within the bank. It’s important to note that PPSL, OCL’s wholly-owned subsidiary, has been using the Axis Bank services since its inception.
As per the RBI mandate, the intermediaries receiving online payments need to collect the money in a nodal account and payments to the seller happen from this account without delay.
What Paytm has to say
In a statement to IANS, Paytm spokesperson said: “The shift of the nodal account to Axis Bank (by opening an Escrow Account) will ensure seamless merchant settlements as before. We strive to continue to empower Indians, contributing significantly to the country’s financial inclusion journey.”
What is a nodal account and an escrow account
Nodal account is a special purpose account created for receiving funds from participating banks and remitting to specific merchants. These accounts are created as per the nodal account guidelines issued by the RBI.
Meanwhile, an escrow account in India is a bank account with conditions on ownership of funds. Simply put, an escrow account is like a safe house for assets while the transaction process is still ongoing.
The RBI said: “In case there is a need to shift the escrow account from one bank to another, the same may be effected in a time-bound manner without unduly impacting the payment cycle to the merchants. The migration should be completed in the minimum possible time and with the prior approval of RBI.”
The balance in the escrow account has to be higher than the value of outstanding prepaid payment instruments (PPIs) and payments due to merchants.
“The amount so maintained in the escrow account shall be used only for making payments to the participating merchant establishments and other permitted payments,” RBI added.
What it means for users
A change in the nodal account is expected to allow Paytm merchants to continue accepting digital payments through the Paytm QR code or card machine.
It’s important to note that Paytm has over 30 crore users, with around 11 crore monthly transacting users. The company also has a network of around 1 crore merchants actively accepting payments.
The company has reassured its users that its mobile app, including the QR code, Soundbox and Card Machine will remain operational even after March 15.
[ad_2]
Source link