Paytm Payments Bank (PPBL), an associate of One 97 Communications (OCL) has said that it is going to comply with the norms of the Reserve Bank of India (RBI).
“The OCL would like to update that it has been informed by its associate, Paytm Payments Bank (PPBL), that the Reserve Bank of India (“RBI”) vide its press release dated 31 January 2024, has given it further directions under section 35A of the Banking Regulation Act, 1949. PPBL is taking immediate steps to comply with RBI directions, including working with the regulator to address their concerns as quickly as possible,” stated PPBL.
On 31 January 2024, RBI said in a notification that no further deposits, credit transactions or top-ups should be allowed in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after 29 February 2024, other than any interest, cashbacks or refunds which may be credited anytime. In a reply to this OCL has said that it has partnered with other banks also apart from Paytm and OCL will deal with other banks excluding Paytm Payments bank
OCL has said in a reply, “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. OCL, as a payments company, works with various banks (not just Paytm Payments Bank), on various payments products. OCL started to work with other banks since starting of the embargo. 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. The next phase of OCL’s journey is to continue to expand its payments and financial services business, only in partnerships with other banks.
OCL has been working with multiple banks to offer its services and they are going to expand their third-bank partnerships.
“We offer acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships. The Paytm Payment Gateway business (online merchants) will continue to offer payment solutions to its existing merchants. OCL’s 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 as well,” stated OCL.
OCL has stated that its other financial services such as loan distribution, insurance distribution and equity broking, are not in any way related to Paytm Payments Bank and are expected to be unaffected by this direction.
The company further added that depending on the nature of the resolution, it expects this action to have a worst-case impact of Rs 300 to 500 crore on its annual earnings before interest, taxes, depreciation and amortisation (EBITDA) going forward. However, the Company expects to continue on its trajectory to improve its profitability.
“We would take this opportunity to clarify that as per banking regulations, Paytm Payments Bank is run independently by its management and board. While OCL is allowed to have two board seats on the board of Paytm Payments Bank, as a part of its shareholder agreement, OCL exerts no influence on the operations of Paytm Payments Bank, other than as a minority board member, and minority shareholder,” the company stated.