Why rbi banned paytm?

I’ve been following this news closely. The RBI flagged repeated lapses in compliance, such as issues in customer verification and questionable practices around data handling. While Paytm as a brand is still operational, the banking arm faced restrictions. Many users have already shifted their wallets and FASTag balances to other banks. It’s important to note that RBI’s action was more about customer safety and regulatory discipline rather than targeting one company.

The Reserve Bank of India (RBI) did not completely “ban Paytm” but took strict action against Paytm Payments Bank in early 2024. The main reasons cited were persistent non-compliance with RBI guidelines and concerns over data security and KYC (Know Your Customer) norms. As a result, Paytm Payments Bank was barred from accepting new deposits, credit transactions, or top-ups after a deadline. This created a lot of confusion among users, though Paytm’s core app for UPI and merchant services continues to function by partnering with other banks.