Paytm on Thursday (February 1) in a statement said that it would take necessary steps immediately to comply with the Reserve Bank of India's (RBI's) directions. The central bank on Wednesday barred the fintech firm from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024. The action against Paytm Payments Bank Ltd (PPBL) followed a comprehensive system audit report and subsequent compliance validation report of external auditors, as per the exchange filing by the company.
Paytm said that it expects to have a worst-case impact of Rs300 to 500 crores on its annual EBITDA going forward, and added that it would take necessary steps immediately to comply with the RBI's directions ordered on Paytm Payments Bank. It also mentioned that it will expand its existing relationships with leading third-party banks to distribute payments and financial services products.
One 97 Communications (OCL), the parent firm of Paytm, in its statement stated that it has been informed by its associate, Paytm Payments Bank Limited, that the RBI has given it further directions under Section 35A of the Banking Regulation Act, 1949. PPBL is taking immediate steps to comply with RBI directions, including working with the regulator to address their concerns as quickly as possible.
The company has been informed that this does not impact user deposits in their savings accounts, Wallets, FASTags, and NCMC accounts, where they can continue to use the existing balances.
OCL, as a payments company, works with various banks (not just Paytm Payments Bank), on various payments products. OCL started to work with other banks since starting of the embargo. We now will accelerate the plans and completely move to other bank partners. Going forward, OCL will be working only with other banks, and not with Paytm Payments Bank Limited.
The next phase of OCL’s journey is to continue to expand its payments and financial services business, only in partnerships with other banks. "We offer acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships. The Paytm Payment Gateway business (online merchants) will continue to offer payment solutions to its existing merchants. OCL’s offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine, will continue as usual, where it can onboard new offline merchants as well," the company said.
With regard to the direction on termination of nodal account of OCL and Paytm Payments Services Limited (PPSL) by February 29, 2024, OCL and PPSL will move the nodal to other banks during this period.
OCL will pursue partnerships with various other banks, to offer various payment products to its customers. OCL’s other financial services such as loan distribution, insurance distribution and equity broking, are not in any way related to Paytm Payments Bank Limited and are expected to be unaffected by this direction.