EPFO to stop accepting claims via Paytm Payments Bank

Paytm Payments Bank crisis: The Employees' Provident Fund Organisation (EPFO) is set to discontinue accepting claims processed through Paytm Payments Bank accounts starting February 2023. The decision follows the Reserve Bank of India's imposition of limitations on the payments bank, citing persistent irregularities, as outlined in a recent government directive.

As per the order, reviewed by Reuters, EPFO officials have been instructed to decline claims associated with accounts held at Paytm Payments Bank, an affiliate of One 97 Communications. The order, issued on Thursday by EPFO under the Ministry of Labour and Employment, signals a significant development in response to regulatory actions against the payments bank.

Last week, the Reserve Bank of India directed Paytm Payments Bank to halt the acceptance of new deposits in its accounts or digital wallets effective from March, citing concerns related to supervision and non-compliance with regulatory requirements.

EPFO, entrusted with a corpus exceeding Rs 18 lakh crore and providing coverage to nearly 30 crore workers, had previously permitted Paytm Payments Bank to process claims until November 2023. The move underscores the impact of regulatory interventions on the operations of financial institutions and their ability to serve as channels for government-related transactions.

Furthermore, EPFO oversees pension funds for workers, underscoring the broader implications of regulatory actions on social security mechanisms and financial intermediaries.

(With Reuters inputs)