In a surprising turn of events, the Reserve Bank of India (RBI) has imposed sanctions on Paytm Payments Bank, declaring a ban on transactions from the bank starting February 29. However, Paytm’s parent company, OCL (One 97 Communications Limited), has swiftly responded, assuring users that the impact on services will be mitigated.
Strategic Shift
In response to the RBI ban, Paytm’s parent company, OCL, announced its decision to broaden partnerships with leading third-party banks for the distribution of payments and financial services products. The company aims to expedite this transition and sever ties 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,’ stated OCL in a BSE filing.
Services Unaffected
While the ban affects transactions from Paytm Payments Bank, certain services remain unaffected. User deposits in savings accounts, wallets, FASTags, and NCMC accounts can be used seamlessly with existing balances. Paytm’s offline merchant payment network, including Paytm QR, Paytm Soundbox, and Paytm Card Machine, will continue operations. New offline merchants can still be onboarded as usual.
OCL’s additional financial services, such as loan distribution, insurance distribution, and equity broking, are distinct from Paytm Payments Bank and are expected to remain unaffected.
Operational Clarifications
To ensure continuity for affected services, Paytm Payments Services Limited (PPSL) will shift the nodal to other banks between January 31 and February 29. The company clarified that its founder has not taken margin loans or pledged any shares directly or indirectly owned by him.
Paytm emphasised the independence of Paytm Payments Bank Limited, stating, ‘OCL exerts no influence on the operations of Paytm Payments Bank Limited, other than as a minority board member and minority shareholder.’
Financial Impact
Despite the reassurances, Paytm anticipates a worst-case impact of ₹ 300 to 500 crores on its annual EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) going forward.
As stakeholders monitor the unfolding situation, Paytm’s strategic shift to collaborate with other banks underscores its commitment to sustaining financial services amidst regulatory challenges.
