Paytm will keep working beyond Feb 29: Vijay Shekhar Sharma allays user fear

Paytm CEO Vijay Shekhar Sharma on Friday stepped in to allay user fears after its banking arm was ordered to stop accepting fresh deposits in a body blow to the fintech firm. 

On Wednesday, the Reserve Bank of India restricted business activities of Paytm Payments Bank, directing it to halt all banking activities by the end of February. The existing customers have the liberty to withdraw funds and deplete balances in prepaid cards or wallets without constraints.

The central bank, in a statement, disclosed that an audit report uncovered "persistent non-compliances and ongoing significant supervisory concerns within the bank, necessitating additional supervisory measures." 

In a post Friday morning, Sharma stepped in and said Paytm's app will "keep working beyond 29 February as usual."

 

Analysts at Bernstein termed the RBI directive a negative development and said that it added to an already heavy regulatory overhang on the business. "Effectively, the RBI's actions bring an end to the operations of Paytm Payments Bank," they noted.

Soon after the development, the company said that it has paused its lending platform operations for a couple of weeks even as it engages in conversations with banks for partnerships.

"Each lender will have concerns and we are engaging with them. We are clarifying what kind of an impact this will have on the portfolio. They had questions and are processing our answers," said Bhavesh Gupta, COO of Paytm, said.

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

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 due to the directive.