'This is more of a speed bump for Paytm': Vijay Shekhar Sharma on RBI's action against Paytm Payments Bank

Paytm CEO Vijay Shekhar Sharma spoke about Reserve Bank of India's action against Paytm Payments Bank Ltd (PBBL) and said it the regulatory action is a "speed bump" for the fintech firm.

In a conference call with analysts, Sharma said: "This is an important moment for all of us, we have seen the update from RBI. The important thing is that we have been given directions and we are taking immediate steps to comply."

The fintech firm 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.

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.

The action against PPBL followed a comprehensive system audit report and subsequent compliance validation report of external auditors.

Paytm stock fell 20% on Thursday following RBI's action.

"Two years ago, embargo was placed earlier on on-boarding new customers, we had already started to work with banks, and we will continue to decline and decrease dependency on PPBL," said Sharma referrring to RBI's action in March 2022 when it asked PPBL to stop onboarding new customers.

"OCL (One97 Communications Ltd, which owns Paytm brand) and PPBL are already in process of moving nodal accounts to other banks, and marketing business services are not affected due to these directions. On the behalf of Paytm, this is more of a speed bump, but we believe in partnership of the banks and we will be able to see to the same in the next few days. There are no details sent to us (Paytm) separately by RBI. The keyword here is that this is a discussion between Paytm Payments Bank and the central bank," Sharma added.

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

"OCL already works various with other banks and Paytm Payments Bank was one of the key banks. From here on we are clear we will work with various other banks and not PPB," said Sharma.

Madhur Deora, executive director, president and group chief financial officer said, "With respect to operations, going forward, we will work with large banks and who also provide these services to other consumer companies."

With inputs from PTI