What changed
Paytm Payments Bank Limited was added to the Second Schedule of the RBI Act, 1934, via a notification dated September 6, 2021, published in the Gazette of India on October 2-8, 2021. This formal recognition elevates its status to a scheduled bank.
What it means for you
For banks and lenders, this means Paytm Payments Bank is now a full-fledged scheduled bank, eligible for central bank facilities like liquidity support and clearing services. It also must maintain CRR and SLR, and is subject to RBI's prudential norms. This could increase competition in retail banking and payments.
What you must do
- Update internal systems to recognize Paytm Payments Bank as a scheduled bank for interbank transactions.
- Review exposure limits and counterparty risk assessments for dealings with Paytm Payments Bank.
- Ensure compliance with any revised reporting requirements for transactions with scheduled banks.
Who it affects
All scheduled commercial banks, Paytm Payments Bank Limited, RBI's regulatory and supervisory departments
What does inclusion in the Second Schedule mean for Paytm Payments Bank?
It means the bank is now a scheduled bank under the RBI Act, 1934, entitling it to borrow from the RBI at the bank rate and access clearing house facilities, while also being required to maintain CRR and SLR.
When did this inclusion take effect?
The notification was issued on September 6, 2021, and published in the Gazette of India during October 2-8, 2021. The RBI circular communicating this was dated October 7, 2021.
Does this change affect other banks' operations?
Yes, other scheduled commercial banks must now treat Paytm Payments Bank as a scheduled bank for regulatory reporting, interbank transactions, and risk management purposes.