Paytm In Talks With Major Banks For Nodal Account Migration; Expects Completion In Some Days
In an analysts call, CEO Vijay Shekhar Sharma expressed commitment to move forward after RBI directives on its associate Bank and emphasized ongoing discussions with banks to overcome the situation
India’s leading payments and financial services distribution company Paytm is in discussion with large banks to migrate nodal accounts and comply with the regulatory norms by February 29.
In an analysts call, Founder and CEO Vijay Shekhar Sharma expressed commitment to move forward after RBI directives on its associate Bank and emphasized ongoing discussions with banks to overcome the situation.
"This is an important moment for all of us at Paytm and Paytm Payments Bank Limited (PPBL). We have seen the update from RBI, which was a public release. The important thing is that PPBL has received regulatory directives from RBI and they are taking immediate steps to comply with the direction," said Vijay.
"On behalf of Paytm, this is more of a speed bump, but we believe in partnership with the banks and we will be able to see through the same in the next few days," added Vijay.
Vijay emphasized Paytm’s proactive approach in collaborating with banks for two years, signaling a decrease in dependency on Paytm Payments Bank (PPB). "Two years ago, embargo was placed earlier on on-boarding new customers, we had already started to work with banks, and we will continue to decline & decrease dependency on PPB," added Vijay.
Nodal accounts are crucial for businesses, serving as bank accounts opened to handle funds for customers and vendors. RBI introduced these accounts to ensure prompt payment releases.
Bhavesh Gupta, President and Chief Operating Officer (COO) of Paytm, provided insights on nodal accounts and future partnership with banks. “We maintain multiple nodal accounts for various businesses that Paytm and the group entities do with large commercial banks and not just paytm payments bank, we have 3 more banks in which we have already API connects on nodal businesses. All three banks are very interested to make sure these nodal accounts which are being instructed to be shut down in PPB could be moved to one of those three banks. So we are currently in discussion both commercially and technologically because there are some obligations of the product, looking at the velocity of operations in those account, which bank can offer us the best experience and commercial.”
Further, Bhavesh clarified that a small percentage of merchants have PPBL bank accounts, and their settlement accounts will be transitioned to other banks. “There are just 10-15% of such merchants having PPBL bank accounts. We will have to move their settlement account to any other bank. We have a 30k salesforce on the ground to make sure repayment and settlement accounts take place on time.”
The management clarified the structural independence between Paytm Payments Bank and Paytm, emphasizing PPB’s autonomy in compliance, risk management, and other regulatory requirements.
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