Paytm app to continue to work beyond Feb 29 despite RBI ban on wallets: CEO Vijay Shekhar Sharma

- February 2, 2024
| By : Patriot Bureau |

Despite the Reserve Bank of India's (RBI) directive to Paytm Payments Bank Ltd (PPBL), a 49% stakeholder in OCL, prohibiting it from accepting deposits or top-ups after February 29, CEO Sharma affirmed that Paytm will remain operational

Paytm logo. (Photo: Facebook)

The CEO of Paytm, Vijay Shekhar Sharma, assured users on Friday that the digital payments and services app will continue its regular operations beyond February 29.

In a statement on the social media platform X, Sharma, who is also the founder and CEO of One97 Communications Ltd (OCL), the owner of the Paytm brand, emphasised the company’s commitment to serving the nation in full compliance.

Despite the Reserve Bank of India’s (RBI) directive to Paytm Payments Bank Ltd (PPBL), a 49% stakeholder in OCL, prohibiting it from accepting deposits or top-ups after February 29, Sharma affirmed that Paytm will remain operational. PPBL is classified as an associate rather than a subsidiary of OCL.

Addressing Paytm users, Sharma stated, “To every Paytmer, Your favourite app is working, will keep working beyond 29 February as usual.”

The Paytm top management revealed during an earnings call that they are actively working on a migration plan for PPBL, wallet, FASTag, etc., users to transition to other banks. The RBI order is estimated to impact Paytm’s annual operational profit by Rs 300-500 crore, as users will no longer be able to add money to their wallets or FASTags.

However, Paytm clarified that its offline merchants network and device business, including Paytm Soundbox, EDC, and QR, remain unaffected by the RBI’s directive to its associate bank. The company will also continue onboarding merchants to its platform.

The Paytm Payment Gateway business, serving online merchants, will continue offering payment solutions to existing merchants. Additionally, financial services such as loan distribution, insurance distribution, and equity broking, which are not directly related to Paytm’s associate bank, are expected to be unaffected by the RBI’s directive.

Paytm emphasised that the RBI order does not impact user deposits in their savings accounts, wallets, FASTags, and NCMC (National Common Mobility Card) accounts, and users can continue using their existing balances.

RBI has instructed PPBL to settle all pipeline transactions and nodal accounts by March 15, 2024, for transactions initiated on or before February 29, 2024, with no further transactions permitted thereafter.

Sharma acknowledged the RBI order as a “big speed bump” during the earnings call, expressing uncertainty about the trigger for the move. However, he conveyed confidence in overcoming the challenges with the partnership of other banks and the capabilities Paytm has developed.

(With PTI inputs)