Disruption from RBI restrictions on Paytm Bank less than feared

NEW DELHI: The worry being stoked that the regulatory action against Paytm Payment Bank will cause major disruption in the market has found few takers. Paytm may be a visible payment tool but RBI’s restrictions on depositing funds in accounts or instruments issued by the payment bank, that kick in from next month, is expected to hit much lower numbers than what was being feared.Here is why.
While Paytm UPI app – which remains unaffected by RBI action – has around 9 crore users, there are only 1.5 crore unique users. That’s because 7.5 crore users have installed other UPI apps, data accessed by TOI showed.
The task appears less complicated than what was estimated when restrictions were announced on January 31 as only around 10% or 90 lakh users of the 9 crore Paytm UPI app users have underlying accounts with the bank. As a result, 8.1 crore users will not face any disruption as their UPI is linked to accounts with other banks. The regulator is likely to issue a set of FAQs for Paytm Payment Bank this week. When it comes to merchants, around 70% of the services of Paytm do not have bank accounts with the payment bank.

In any case, out of over 3.1 crore savings bank accounts with Paytm Payment Bank, around 1.4 crore or 45% are either dormant or frozen. The bank has around 10 lakh current accounts. In fact, the large number of dormant or frozen accounts have been one of the key areas of concern for the regulator.
Similarly, when it comes to pre-paid payment instrument (PPI) wallets, while number of such wallets is around 35 crore, 30 crore – which is over 85% – have zero balance. Around 5 crore wallets have balance or have been active in the last one year, a sources said.
There have been concerns that some of the direct benefit transfer (DBT) beneficiaries may be impacted by RBI action, but it has emerged that over last six months, there were around 1 lakh unique users, who have received benefits into Paytm Payment Bank accounts.