In a pivotal development, One97 Communications Ltd (OCL), the parent company of Paytm, is charting a strategic course following the Reserve Bank of India’s (RBI) decision to terminate Paytm’s nodal accounts post-February 29.
OCL’s Chairman and CEO, Vijay Shekhar Sharma, assured stakeholders that despite the RBI action, marketing business services remain unaffected. Acknowledging the situation, he stated, “OCL already works with various banks, and Paytm Payments Bank was one of the key banks. From here on, we are clear we will work with various other banks and not PPBL.”
The nodal accounts, designed to receive money from participating banks and remit it to specific merchants, play a crucial role in electronic payments. The RBI’s 2009 mandate prescribed nodal accounts to ensure customer protection and proper accounting for online transactions. However, the recent directive not only terminates nodal accounts but also prohibits Paytm Payments Bank from accepting deposits or top-ups in key products after February 29, citing “persistent non-compliance and material supervisory concerns.”
Bhavesh Gupta, Paytm’s President, addressed the practical implications, stating, “In offline versions, where you see our All-in-one QR, powered by Paytm Payments Bank… now that QR will need to be changed to any other sponsored bank. This will be a large exercise, and the new acquisition will start in a week or two.”
Highlighting the gravity of the situation, Sharma noted, “This is an important moment for all of us; we have seen the update from the RBI. The important thing is that we have been given directions, and we are taking immediate steps to comply.” Concerns were raised about the potential impact on Paytm’s annual EBITDA, with Sharma estimating a worst-case scenario ranging from Rs 300 crore to 500 crore, contingent on the resolution’s nature.
Despite the challenges, Sharma expressed optimism, stating, “There are no details sent to us separately by the RBI. The keyword here is that this is a discussion between Paytm Payments Bank and the central bank.” He emphasized the company’s commitment to collaboration with other large banks, aiming to decrease dependency on PPBL. Describing the situation as a “speed bump,” Sharma believes that partnership with other financial institutions will pave the way for overcoming these challenges in the coming days.
