
As Paytm stock falls nearly 20% in two days after Reserve Bank of India's action against Paytm Payments Bank Ltd, Paytm Group CFO Madhur Deora said "Paytm and Paytm Payments Bank not one entity and it cannot be".
"There may be an impression that Paytm and Paytm Payment Bank is one, but by design and by structure, it is not and it cannot be," said Madhur Deora, President and Group CFO at Paytm. Following the RBI's directive to Paytm's associate bank, PPBL, there has been an impression that the company and its associate are one and the same, Deora clarified during a conference call with analysts.
"First it is an associate company and second is not an associate company in the sense that it is same Bank. And first and foremost, for a bank is that, it has to follow the governance that a bank is supposed to follow, which is to say that has to has its independent management team, which reports to the board," Deora explained.
The president and Group CFO of Paytm further added that a bank has to have independent compliance and risk teams too.
Paytm, as a payments company works with various banks (not just its associate), on various other products. The company has been working with other banks for the past two years and will now accelerate the plans and will completely move to other partners. The next phase of the company’s journey is to continue to expand its payments and financial services businesses, only in partnership with other bank, he said.
The fintech company, in an exchange filing, also stated that it is allowed to have two board seats on the board of its associate as a part of its shareholder agreement and it does not have influence on the operations of the bank.
"We would take this opportunity to clarify that, as per banking regulations, Paytm Payments Bank Limited is run independently by its management and board. 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," the company stated in the filing.
Shares of One97 Communications Ltd, which owns Paytm brand, slumped another 20% on Friday, as the RBI has directed Paytm Payments Bank Ltd (PPBL) to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags and other instruments after February 29.
The stock tanked 20% to Rs 487.05 — its lowest trading permissible limit for the day — at the BSE.
In two days, the company’s market capitalisation (mcap) eroded by Rs 17,378.41 crore to Rs 30,931.59 crore.
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, FASTags etc as RBI barred Paytm Payments Bank Ltd from accepting deposits or top-ups in any customer account.
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 February 29, 2024.
Till then, customers can add money as well as withdraw money from the Paytm wallet and PPBL
account.