New Delhi: Paytm is expecting an impact on its annual operational profit estimated to be between Rs 300 500 crore, due to the recent directive from the Reserve Bank of India (RBI). The directive, issued on Wednesday restricts Paytm Payments Bank (PPBL) from offering services such as accepting deposits top ups in customer accounts prepaid instruments, wallets and FASTags.
This regulatory decision by the RBI follows a system audit report and subsequent compliance validation conducted by external auditors. In response to this development Paytm stated in a filing that they anticipate a worst case impact of Rs 300 500 crore on their annual EBITDA going forward. However the company remains committed to improving profitability despite this setback.
One97 Communications Ltd (OCL) which owns the Paytm brand holds a 49% stake in PPBL. Although PPBL is classified as an associate, than a subsidiary of OCL Paytm emphasizes that it has been collaborating with various banks beyond PPBL as part of its payments business. Now they plan to accelerate their efforts to shift entirely to bank partners.
It's worth noting that since March 11th, 2022 RBI had already prohibited PPBL from acquiring customers.
Paytms filing stated that the next phase of OCLs journey involves expanding its payments and financial services business. Only through partnerships with other banks.
PPBL is actively taking steps to comply with RBIs directives. Is working closely with the regulator to address concerns promptly. Users can rest assured that their savings accounts, wallets, FASTags and NCMC accounts will not be affected by this directive allowing them to continue using their existing balances.
While the Paytm Payment Gateway business for merchants will continue as usual Paytms offline merchant payment network offerings like Paytm QR, Paytm Soundbox and Paytm Card Machine will also remain uninterrupted. RBI has also instructed the termination of 'nodal accounts of OCL and Paytm Payments Services (PPSL) by February 29th, 2024. In response to this directive OCL and PPSL will be moving these accounts to banks within this time frame.
Paytm has expressed its commitment to forming partnerships with banks in order to provide a wide range of payment products to its customers. It is important to note that the company has clarified that its financial services such as loan distribution, insurance distribution and equity broking are separate, from PPBL and are not expected to be impacted by these measures.
—Input from Agencies
