On Wednesday, the RBI said it has directed PPBL to stop onboarding new customers with “immediate effect”. The restrictions were imposed after a report by external auditors revealed “ongoing breaches and ongoing material regulatory concerns” at the bank. This is the second time action has been taken against PPBL since March 2022, when the company was asked to stop onboarding new customers. In March 2022, the RBI had imposed restrictions on PPBL and directed it to engage an IT audit firm to conduct a comprehensive system audit of its IT system. In an earlier action on October 20, 2021, the RBI had imposed a fine of ₹1 crore on the bank for violating the Payment and Settlement Systems Act, 2007.
As per the latest move by RBI, PPBL will not be permitted to accept any further deposits or credit transactions or recharges on customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, except interest, if any. Cashbacks or refunds that can be credited at any time.
“After February 29, no other banking services other than those mentioned in (ii) above, such as money transfers (irrespective of the name and type of services such as AEPS, IMPS etc.), BBPOU and UPI, shall be permitted to be offered by the Bank. 2024,” the release notes say.
However, withdrawal or use of funds by its customers from their accounts including Savings Bank Accounts, Current Accounts, Prepaid Instruments, FASTags, National Common Mobility Cards etc. is permitted without any restrictions up to the amount of available balance.
The press release also states that One97 Communications and PPSL node accounts must be terminated no earlier than, but in any event no later than, February 29, 2024. The settlement of all pipeline transactions and node accounts (with respect to all transactions initiated on or). before February 29, 2024) must be completed by March 15, 2024 and no further transactions are permitted thereafter.
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