wp-signup can validate user registration form but can't add users

I installed Multisite a couple of days back (converted an existing installation to Multisite to be precise). I want that users should be able to register on the network but not create their own sites. I chose that options (of user accounts but not blogs being created) but there seems to be some problem.

The https://www.MAINSITE.com/wp-signup.php page is malfunctioning. It shows a form for users to fill in their username and email address, but doesn’t add users to database.

Looks like it runs the function function validate_user_form() as it can return errors like username already in use etc. but doesn’t run the function wpmu_signup_user and confirm_user_signup($user_name, $user_email)

Any idea what could be causing this problem?