Why RBI banned India's biggest UPI bank yesterday?

Let's look at the collapse of Paytm Payments Bank ⬇️

Paytm Bank has 30 crore wallets - that means 20% of India's population are dependent on "🎵 Paytm karo". It carries out 1.6 billion UPI and 8 million Fastag transactions a month! With a single decision by RBI, all these capabilities of Paytm are bombed.

Let's look at the reasons...

Whereas Google Pay and PhonePe had to partner with traditional banks like ICICI for facilitating transactions, Paytm had its own bank!

Having its own payment banks saved it huge costs, adding capabilities to win in the payments space.

However, Paytm misused its USP by selling products that a bank is not allowed to sell, including personal loans and BNPL products of other NBFCs.

The act of using Paytm app's reputation to sell what a payments bank is never allowed to sell, made RBI to interpret it as manipulative, leading to a decision of immediately banning the payments bank.

How will Paytm app survive?

3.1 crore merchants are dependent on Paytm for daily transactions!

Paytm payments bank used to be the infrastructure to facilitate these transactions.

RBI has given a deadline of 29th Feb to Paytm for finding a traditional bank to carry out these transactions.

Difficult time for the Paytm team, but hopefully they will out stronger.

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