Vijay Shekhar Sharma, the visionary behind India’s premier digital payment platform Paytm, held a brief meeting with Finance Minister Nirmala Sitharaman on Tuesday, February 6. This rendezvous comes amidst a tumultuous period for Paytm Payments Bank ( PPBL ), following the Reserve Bank of India’s ( RBI ) stringent regulatory measures imposed on January 31.
The RBI’s unprecedented action dealt a severe blow to PPBL, with strict restrictions prohibiting the bank from conducting any banking activities beyond February 29, 2024. These restrictions encompass a broad spectrum, including the acceptance of deposits, engagement in credit transactions, facilitation of wallet top-ups, and processing of bill payments. The decision stemmed from persistent non-compliance by Paytm Payments Bank with regulatory norms, compelling the central bank to take decisive steps to address the situation.
According to insider sources, Paytm has violated the regulations issued by the RBI and is also involved in money laundering activities.
The Paytm Payment Banks Limited, in its press release has stated that “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 in their savings accounts, Wallets, FASTags, and NCMC accounts, where they can continue to use the existing balances.”
Customers should be aware that the restrictions apply to Paytm Bank, not the Paytm app itself. The Paytm app collaborates with multiple banks, allowing customers with accounts in other banks such as Axis and SBI to continue utilising its services.
Also several startup founders of India have backed Paytm and urged RBI and central government for lifting the veil imposed.
The Paytm also stated that “Depending on the nature of the resolution, the Company ex*tts this action to have a worst case impact of RS. 300 to 500 crores on its annual EBITDA going forward. However, the Company expects to continue on its trajectory to improve its profitability. Separately, into market rumours, our founder has reconfirmed to us that he has not taken any margin loans, or otherwise pledged any shares that are directly or indirectly owned by him. We would take this opportunity to clarify that as per banking regulations, Paytm Payments Bank Limited is run independently by its management and board. While OCL is allowed to have two board seats on the board of Paytm Payments Bank Limited, as a part of its shareholder agreement, OCL exerts no influence on the operations Of Paytm Payments Bank Limited, other than as a minority board member, and minority shareholder.”
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