One97 Communications, the parent company of Paytm brand, said it would disassociate from Paytm Payments Bank and partner with other banks. The move comes in aftermath of RBI’s actions against PPBL, which led to 20% drop in OCL’s shares.
Addressing analysts, Paytm Founder and OCL CEO Vijay Shekhar said the development was a “speed bump” and the company will tide over the crisis.
On January 31, the Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank Ltd (PPBL) after reviewing a system audit report and a subsequent compliance validation report from external auditors. The bank, a subsidiary of India’s prominent payment firm Paytm, was informed by the regulator that as of February 29, it will be unable to accept new deposits, facilitate credit transactions, or provide fund transfer services, including Unified Payments Interface (UPI) facilities.
“The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated at the earliest, in any case not later than February 29, 2024. No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime,” Yogesh Dayal, a chief general manager with the central bank, said in an official press statement.
Withdrawal or usage of balances from customer accounts, including savings and current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc., will be permitted without any restrictions, up to the available balance, according to the statement.
“Settlement of all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024, and no further transactions shall be permitted thereafter,” the central bank further stated.
The RBI said it had in March 2022 asked the Paytm Payments Bank to stop adding new customers.
However, a Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action, the RBI said, without disclosing details.
