CAIT Asks Businesses And Traders To Shift From Paytm After RBI Crackdown

SUMMARY

The trader's body is advising small brick-and-mortar businesses to make well-informed decisions and take proactive steps to shift to regulatory-compliant payment apps

CAIT has emphasised the need for users to take proactive measures to safeguard their funds and maintain uninterrupted financial transactions

This comes days after the RBI directed Paytm Payments Bank to cease accepting new deposits in its accounts or wallets after February 29

Traders body, Confederation of All India Traders (CAIT), has advised all the businesses and traders to switch from Paytm to other payment platforms for business-related transactions, days after the Reserve Bank of India (RBI) barred the fintech major’s banking unit from any deposits or credit transactions, or top-ups in any of its customer accounts.

The trader’s body has asked the small brick-and-mortar businesses to make informed decisions and act proactively to switch to regulatory-compliant payment apps. ET reported.

CAIT’s national president BC Bhartia and secretary general Praveen Khandelwal issued a statement advising traders to address potential financial challenges arising from the RBI’s actions against Paytm.

Further, as per a MoneyControl report, CAIT emphasised the need for users to take proactive measures to safeguard their funds and maintain uninterrupted financial transactions, given the imposed restrictions by the RBI.

The statement, reported by MoneyControl on February 4, 2024, highlighted the diverse user base of Paytm, including small traders, vendors, hawkers, and women, who could face financial disruptions due to the RBI’s restrictions.

Set up in 2017, Paytm Payments Bank is among the top payments banks in the country, providing a mobile banking platform and e-wallet services. Paytm’s parent firm, One97 Communications, holds a 49% stake in Payment Payments Bank.

Last week, the RBI has tightened the reins on Paytm’s banking operations.

As part of this regulatory action, Paytm has been informed that it cannot undertake fresh deposits, support credit transactions, or provide fund transfers, including the Unified Payments Interface (UPI) facility, beyond the specified date.

Following the Reserve Bank of India’s directive instructing Paytm to cease its banking services, Paytm’s market value dropped to $3.7 Bn, witnessing a significant $2 Bn decline. The shares fell sharply, reaching the 20% daily limit on both Thursday and Friday.

On Monday, Paytm stock fell another 10%, again hitting the lower circuit, extending its fall to over 42% in the last three sessions.

Meanwhile, The RBI is also reportedly mulling the cancellation of the operating licence of Paytm Payments Bank next month.