RBI imposes restrictions on paytm, CAIT urges traders to shift to alternate payment methods

In response to recent restrictions imposed by the Reserve Bank of India (RBI) on Paytm, the Confederation of All India Traders (CAIT) has issued a cautionary advisory, urging traders across the country who are Paytm users to consider alternative payment options.

The advisory comes as a proactive measure to protect the financial interests of small traders, vendors, hawkers, and women who heavily rely on Paytm for their transactions. CAIT, in a press release, expressed concerns about potential financial disruptions for this demographic due to the RBI restrictions.

CAIT National President B.C. Bhartia and Secretary General Praveen Khandelwal highlighted the issues surrounding the security and continuity of financial services provided by Paytm. They emphasized the need for a thorough investigation by the Enforcement Directorate (ED) if there is any evidence of fund irregularities.

Khandelwal shed light on one of the key reasons behind the RBI restrictions, stating that Paytm Payment Bank had created millions of accounts without proper identification. The Know Your Customer (KYC) process was allegedly neglected for these accounts, leading to transactions involving millions of rupees without proper identification, raising concerns about potential money laundering.

Reports suggest that the RBI imposed the ban primarily due to Paytm Payment Bank linking over a thousand users to a single PAN (Permanent Account Number). Auditors also found that the platform was not adhering to regulatory rules, prompting the CAIT to recommend traders explore alternative payment applications that comply with regulatory guidelines.