RBI Bans Paytm Bank: What Happens To Purchased FASTags After February 29? Explained

RBI Bans Paytm Bank: What Happens To Purchased FASTags After February 29? Explained

Despite being distinct entities, the Paytm app and Paytm Payments Bank share certain features such as FASTag.

Rahul MUpdated: Thursday, February 01, 2024, 05:51 PM IST
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The Reserve Bank of India (RBI) dealt a significant blow to One97 Communications, the parent company of Paytm, by directing Paytm Payments Bank to cease its primary payment services by the end of February due to persistent non-compliance issues. Despite being distinct entities, the Paytm app and Paytm Payments Bank share certain features such as FASTag.

Given that the Paytm app is widely used by millions of people in India, news of its services being substantially impacted has understandably raised concerns. The key questions arising include whether FASTags purchased through Paytm will remain operational and whether car owners will need to acquire new FASTags altogether.

What will happen after Feb 29?

Currently, it is evident that all Paytm services will continue to operate normally until February 29, 2024. However, what lies ahead remains uncertain.

For those unfamiliar, each FASTag is associated with a distinct UPI ID. In the case of Paytm FASTag users, this UPI ID is directly associated with Paytm Payments Bank.

According to the recent RBI directive, Paytm users will no longer be able to perform credit transactions or add funds to any customer accounts or prepaid instruments after February 29, 2024. It has also been indicated that services like FASTag may cease to function after February 29, meaning that topping up the FASTag ID will not be possible beyond this month's deadline. However, existing balances can be used until February 29.

Paytm has officially dispelled these rumors and clarified through a post on its official account that “you can continue using the existing balances on your Paytm FASTag. We started our journey of working with other banks over the last two years, which we will now accelerate.”

Paytm promises 'effective solutions'

Technically, Paytm did not provide a specific comment regarding the fate of FASTag IDs after February 29. However, it assures its commitment to developing "effective solutions" to ensure a smooth customer experience.

This statement implies that Paytm could potentially collaborate with conventional banks to facilitate its FASTag service, enabling customers to continue using it for their vehicles. We would rather await an official statement from Paytm regarding these modifications and their impact on customers in the coming weeks.

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