The central bank on Wednesday barred Paytm from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024
Screengrab
The RBI's order to stop almost all services of Paytm Payments Bank after February 29 will have an impact of Rs 300-500 crore on annual operational profit of the company.
ADVERTISEMENT
The central bank on Wednesday barred Paytm 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.
"Depending on the nature of the resolution, the company expects this action to have a worst case impact of Rs 300-500 crore on its annual EBITDA going forward. However, the company expects to continue on its trajectory to improve its profitability," Paytm said in a regulatory filing.
One97 Communications Ltd (OCL), which owns Paytm brand, holds 49 per cent stake in PPBL but classifies it as an associate of the company and not as a subsidiary.
"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 PPBL," Paytm said.
On March 11, 2022, RBI had barred PPBL from onboarding new customers with immediate effect.
"The next phase of OCL's journey is to continue to expand its payments and financial services business, only in partnerships with other banks," the filing said.
Paytm said 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," the filing said.
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 filing said.
RBI also said the 'nodal accounts' of OCL and Paytm Payments Services (PPSL) are to be terminated at the earliest, in any case not later than February 29, 2024. The filing said that 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," Paytm said.
The company said that its financial services such as loan distribution, insurance distribution and equity broking, are not in any way related to PPBL and are expected to be unaffected by this direction.
This story has been sourced from a third party syndicated feed, agencies. Mid-day accepts no responsibility or liability for its dependability, trustworthiness, reliability and data of the text. Mid-day management/mid-day.com reserves the sole right to alter, delete or remove (without notice) the content in its absolute discretion for any reason whatsoever.
Subscribe today by clicking the link and stay updated with the latest news!" Click here!
