Paytm has announced its intention to transition its entire operations to alternative bank partners, excluding Paytm Payments Bank, in order to broaden its payments and financial services portfolio. The decision comes in response to the Reserve Bank of India's directive, effective from March, prohibiting Paytm Payments Bank from accepting new deposits. In light of this regulatory measure, Paytm foresees a potential adverse impact on its annual earnings, estimating it to be in the range of Rs 300 to 500 crore. The company is actively implementing measures to comply with RBI directives and is collaborating with the regulator to promptly address any concerns that may arise.
One97 Communications Ltd. (OCL), the parent company of Paytm, has announced its intention to exclusively collaborate with alternative bank partners, excluding Paytm Payments Bank Limited (PPBL). In a statement released, the fintech giant revealed its accelerated plans to fully transition to other banks, emphasizing that OCL will exclusively work with these banks in the future as it continues to expand its payments and financial services business.
Regarding Paytm's Payment Gateway business, which serves online merchants, the company assured that it will continue providing payment solutions to its current clientele. Importantly, the company clarified that the directive does not have any impact on user deposits across various accounts, including savings accounts, Wallets, FASTags, and NCMC accounts. Users can continue utilizing their existing balances without any changes. Additionally, OCL's offline merchant payment network services, which include Paytm QR, Paytm Soundbox, and Paytm Card Machine, will proceed without interruption, allowing for the onboarding of new offline merchants in the usual course of operations.
The statement also highlighted that OCL's other financial services, such as loan distribution, insurance distribution, and equity broking, are entirely unrelated to Paytm Payments Bank Limited and are expected to remain unaffected by this strategic shift. Paytm emphasized that its founder, Vijay Shekhar Sharma, has not been involved in margin loans or pledged any shares directly or indirectly owned by him. Furthermore, the company clarified that Paytm Payments Bank Limited operates independently under its management and board. Although OCL holds two board seats on the bank as part of its shareholder agreement, it maintains a minority position, exerting no significant influence on the bank's operations beyond being a minority board member and shareholder, according to Paytm.