New Delhi, 1 Feb

Fintech firm Paytm sees an impact of Rs 300-500 crore on its annual operational profit as its customers will not be able to add money to their wallets, FASTag etc following RBI barring Paytm Payments Bank Ltd from accepting deposits or top-ups in any customer account.

In December, 41 crore UPI remittances were made through Paytm Payments Bank Ltd (PPBL). The central bank on Wednesday barred PPBL from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after 29 February, 2024.

The action against PPBL followed a comprehensive system audit report and subsequent compliance validation report of external auditors. "Depending on the nature of the resolution, the company expects this action to have a worst case impact of Rs 300-500 crore on its annual EBITDA going forward. However, the company expects to continue on its trajectory to improve its profitability," Paytm said in a regulatory filing.

One97 Communications Ltd (OCL), which owns Paytm brand, holds 49 per cent stake in PPBL but classifies it as an associate of the company and not as a subsidiary. "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 after 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 PPBL," Paytm said.

RBI has ordered PPBL to settle all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before 29 February, 2024) by 15 March, 2024 and no further transactions would be permitted thereafter.

On 11 March, 2022, RBI had barred PPBL from onboarding new customers with immediate effect. Earlier, Indian Highways Management Company (IHMCL), the arm of NHAI, had barred PPBL from issuing fresh FASTags after it found that it was not following the parameters prescribed in the service-level agreement.

"The next phase of OCL's journey is to continue to expand its payments and financial services business, only in partnerships with other banks," the filing said.

The company said that its financial services such as loan distribution, insurance distribution and equity broking, are not in any way related to PPBL and are expected to be unaffected by this direction.

"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," the filing said.

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," the filing said.

RBI also said the 'nodal accounts' of OCL and Paytm Payments Services (PPSL) are to be terminated at the earliest, in any case not later than 29 February, 2024. The filing said that 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," Paytm said.