In order to distribute payments and financial services goods, Paytm plans to deepen its current partnerships with top third-party banks

In recent developments, Paytm Payments Bank Limited (“PPBL”), an affiliate of OCL (One 97 Communications Limited), has received directives from the Reserve Bank of India (RBI). In response, Paytm Payments Bank is set to enhance its existing collaborations with prominent third-party banks to disseminate payments and financial services products.

OCL has conveyed that its associate, PPBL, informed them of the RBI’s instructions via a press release dated January 31, 2024, issued under section 35A of the Banking Regulation Act, 1949. PPBL is promptly taking measures to comply with these directions, actively working with the regulator to address concerns swiftly.

It is clarified that this directive does not impact user deposits in savings accounts, Wallets, FASTags, and NCMC accounts. Users can continue utilizing their existing balances without disruption.

OCL, being a payments company, collaborates with various banks beyond Paytm Payments Bank, particularly on various payments products. OCL commenced working with alternative banks since the initiation of the embargo. In an official statement, Paytm affirms its commitment to accelerating plans and exclusively collaborating with other bank partners, excluding Paytm Payments Bank Limited from future operations.

The Paytm Payment Gateway business, serving online merchants, will persist in offering payment solutions to existing merchants. Offline merchant payment network offerings, such as Paytm QR, Paytm Soundbox, and Paytm Card Machine, will continue as usual, allowing onboarding of new offline merchants.

Regarding the directive to terminate nodal accounts of OCL and Paytm Payments Services Limited (PPSL) by February 29, 2024, both entities will transition nodal operations to other banks during this period. OCL plans to forge partnerships with various other banks to offer diverse payment products to customers.

OCL’s other financial services, encompassing loan distribution, insurance distribution, and equity broking, remain independent of Paytm Payments Bank Limited and are anticipated to be unaffected by this directive.

Depending on the resolution’s nature, the company anticipates a worst-case impact of Rs. 300 to 500 crores on its annual EBITDA going forward. However, the company expresses confidence in continuing its trajectory to enhance profitability.

Addressing market rumors, Paytm clarifies that its founder has not taken any margin loans or pledged any shares owned directly or indirectly. The statement emphasizes that Paytm Payments Bank Limited operates independently, adhering to banking regulations, with OCL exerting no operational influence other than its minority role on the board.