Paytm’s parent added that it expects this action to have an impact of Rs 300 to 500 crore on its annual EBITDA
New Delhi, NFAPost: A day after the Reserve Bank of India (RBI) barred Paytm Payments Bank from accepting fresh deposits from February 29, the company’s parent, One 97 Communications Limited (OCL), said that it is already working with other banks and will accelerate its plans and completely move to third-party partners.
In a regulatory filing, the company said, “OCL, as a payments company, works with various banks (not just Paytm Payments Bank), on various payments products.”
“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,” it added.
The company added that it expects this action to have an impact of Rs 300 to 500 crore on its annual EBITDA.
The RBI issued the order citing “persistent non-compliance” and “material supervisory concerns”. It had barred the bank from taking new customers in March 2022. The company’s stock hit the lower circuit on Thursday, falling 20 per cent.
In the filing, OCL said that its offline merchant payment network offerings, like Paytm QR, Paytm Soundbox, and Paytm Card Machine, will continue as usual, where it can onboard new offline merchants. Moreover, the Paytm Payment Gateway business (online merchants) will continue to offer payment solutions to its existing merchants.
“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,” it added.
The filing also read that OCL’s financial services like loan distribution, insurance distribution and equity broking are not related to the Paytm Payments Bank Ltd “in any way” and are expected to be “unaffected”.
CAIT Issues Advisory to traders to switch from Paytm to other payment apps
In response to recent regulatory developments, the Confederation of All India Traders (CAIT) has issued a cautionary advisory to traders across the Country who are Paytm users to switch from Paytm to other payment options.
The Reserve Bank of India (RBI) has imposed certain restrictions, prompting CAIT to recommend that users take proactive measures to protect their funds and ensure uninterrupted financial transactions. Large number of small traders, vendors, Hawkers and women are making payments through Paytm and as such RBI restrictions on Paytm could lead financial disruption to these people-said CAIT.
CAIT National President B C Bhartia and Secretary General Praveen Khandelwal said that the recent restrictions imposed by RBI on Paytm have raised concerns about the security and continuity of financial services provided by the platform.
“One of the major reasons for the ban on Paytm Payment Bank was the creation of millions of accounts without proper identification. The process of Know Your Customer (KYC) was not completed for these accounts. Moreover, transactions involving millions of rupees were conducted without proper identification, raising concerns about money laundering,” said CAIT National President B C Bhartia and Secretary General Praveen Khandelwal.
As per media reports, the RBI imposed the ban primarily because Paytm Payment Bank had linked over a thousand users to a single PAN (Permanent Account Number). Additionally, both the RBI and auditors found that Paytm Payment Bank was not adhering to regulatory rules. CAIT believes that if there is any evidence of fund irregularities, the Enforcement Directorate (ED) should investigate Paytm Payment Bank.
CAIT National President B C Bhartia and Secretary General Praveen Khandelwal underscore the importance of risk mitigation for traders, urging them to explore alternative payment applications that are compliant with regulatory guidelines.
“To ensure the seamless functioning of transactions and safeguard financial assets, both trade leaders advises Paytm users to transition to other payment apps or consider direct UPI transactions. They further suggested that several Banks do have their payment applications as well and those could be a good alternative to secure money of the people, said CAIT National President B C Bhartia and Secretary General Praveen Khandelwal.
CAIT National President B C Bhartia and Secretary General Praveen Khandelwal emphasised the urgency of this advisory, urging traders to act promptly and make informed decisions to mitigate any potential adverse effects on their financial operations.
Both trade leaders said that our advisory is a precautionary measure to protect the financial interests of traders in light of recent developments. We encourage users to stay informed and take proactive steps to ensure the security of their funds.”
CAIT remains committed to keeping the trading community informed and empowered during such regulatory changes.
