New Delhi [India], February 1 (ANI): Paytm Payments Bank Limited (“PPBL”), an associate of OCL (One 97 Communications Limited), has received RBI directions. Paytm Payments Bank is set to expand its existing relationships with leading third-party banks to distribute payments and financial services products
OCL updated that it has been informed by its associate, PPBL, that the Reserve Bank of India (RBI) vide its Press Release dated January 31, 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.
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 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. We offer acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships,” Paytm said in an official statement.
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, Paytm Card Machine, will continue as usual, where it can onboard new offline merchants as well.
With regard to the direction on termination of nodal account of OCL and Paytm Payments Services Limited (PPSL) by February 29, 2024, OCL and PPSL will move the nodal to other banks during this period.
OCL will pursue partnerships with various other banks, to offer various payment products to its customers.
OCL’s other financial services such as loan distribution, insurance distribution and equity broking, are not in any way related to Paytm Payments Bank Limited and are expected to be unaffected by this direction.
Depending on the nature of the resolution, the Company expects this action to have a worst case impact of Rs. 300 to 500 crores on its annual EBITDA going forward. However, the Company expects to continue on its trajectory to improve its profitability.
“Separately, in response to market rumours, our founder has reconfirmed to us that he has not taken any margin loans, or otherwise pledged any shares that are directly or indirectly owned by him,” Paytm further said.
“We would take this opportunity to clarify that as per banking regulations, Paytm Payments Bank Limited is run independently by its management and board,” it added.
While OCL is allowed to have two board seats on the board of Paytm Payments Bank Limited, as a part of its shareholder agreement, OCL exerts no influence on the operations of Paytm Payments Bank Limited, other than as a minority board member, and minority shareholder. (ANI)
