Paytm Faces Rs 500 Crore Impact from RBI's Payments Bank Ban
By siliconindia | Thursday, February 1, 2024
Paytm has expressed expectations of a potential negative effect on its annual earnings, estimating a range between Rs 300 to 500 crore. This is attributed to the Reserve Bank of India's directive, which prohibits its subsidiary, Paytm Payments Bank, from accepting new deposits starting in March. The company is actively implementing measures to comply with RBI directives and is collaborating with the regulator to promptly address concerns. The parent company, One97 Communications Ltd. (OCL), has revealed intentions to transition entirely to alternative bank partners, excluding Paytm Payments Bank Limited (PPBL).
“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", the fintech giant said in a statement.
Paytm's Payment Gateway business, catering to online merchants, will continue delivering payment solutions to its existing clientele, the firm said. It added that the order does not impact user deposits in their savings accounts, Wallets, FASTags, and NCMC accounts, where they can continue to use the existing balances. Additionally, OCL's offline merchant payment network services, encompassing Paytm QR, Paytm Soundbox, and Paytm Card Machine, will continue seamlessly. This includes the capacity to onboard new offline merchants in the usual course of operations, the statement added.
“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", it added. Paytm clarified that its founder, Vijay Shekhar Sharma, has not been involved in margin loans or the pledging of any shares directly or indirectly owned by him. Additionally, the company emphasized that Paytm Payments Bank Limited operates autonomously under its own management and board.
Although One97 Communications Ltd. (OCL) holds two board seats on the bank as per its shareholder agreement, the company clarified that it maintains a minority position. It asserted that it does not exert significant influence on the bank's operations beyond its role as a minority board member and shareholder, according to Paytm.
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