Will expand existing relationships with third-party banks: Paytm after RBI curbs

Paytm will only be working with other banks, and “completely move” to other bank partners after the RBI imposed curbs on Paytm Payments Bank.The Vijay Shekhar Sharma-owned fintech, which pioneered digital transactions in the country and cashless payments after the demonetisation of 2016, had launched its own Payments Bank in 2017. The company, which operates under the aegis of One97 Communications Limited said it is taking immediate steps to comply with RBI directions, including working with the regulator to address their concerns as quickly as possible. User deposits in savings accounts, wallets, FASTags, and NCMC will not be impacted, Paytm said, adding that users can continue to use their existing balances.“The Company works with various banks (not just Paytm Payments Bank), on various payments products…since starting of the embargo. We now will accelerate the plans and completely move to other bank partners,” Paym said.The company will be no longer be working with Paytm Payments Bank Limited, it stated.Paytm said it expects the action to have a “worst-case” impact of Rs. 300 to 500 crores on its annual EBITDA going forward.As a corrective measure, Paytm said it will move nodal accounts from Paytm Payments Bank to other banks during this period, before the February 29 deadline of the RBI.Highlighting the next phase of the fintech's journey, Paytm parent One97 Communications (OCL) said it will continue to expand its payments and financial services business “only in partnerships with other banks”. The company will offer acquiring services to merchants along with other partner banks, further expanding third-party bank partnerships after the directive. The directive will not affect the Paytm Payment Gateway business, along with offline offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine.The Gateway business will continue to offer payment solutions to existing merchants, while its offline merchant payment network offerings like the QR code and Soundbox can onboard new offline merchants as well. Paytm said its other financial services such as loan distribution, insurance distribution and equity broking are not related to Paytm Payments Bank “in any way,” and will hence remain unaffected by the directive. The company has also rebuffed rumours of margin loans, saying founder Vijay Shekhar Sharma “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.” Paytm Payments Bank Limited is run independently by its management and board, wherein Vijay Shekhar Sharma is a part-time chairman listed by their website.“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,” the company stated.

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Will expand existing relationships with third-party banks: Paytm after RBI curbs

The fintech said it has taken note of RBI directive on Paytm Payments Bank and is taking “immediate steps” to comply

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