Paytm App to Function Normally After February 29: CEO Vijay Shekhar Sharma
Paytm CEO Vijay Shekhar Sharma reassures users that the digital payments app will operate seamlessly beyond February 29, despite the Reserve Bank of India's directive preventing certain transactions for Paytm Payments Bank Limited after that date. OCL possesses a 49% stake in PPBL but designates it as an associate rather than a subsidiary.
CEO Vijay Shekhar Sharma expresses gratitude for the unwavering support, emphasizing a commitment to finding solutions and serving the nation in compliance. Despite challenges, he anticipates India's continued success in global payment innovation and financial inclusion, with PaytmKaro as a prominent advocate. Paytm's top management, in a February 1 earnings call, discusses a migration plan for PPBL, wallet, and FASTag users to other banks, acknowledging an estimated Rs 300-500 crore impact on annual operational profit due to restrictions on customer fund additions.
The company clarified that its offline merchants network, including offerings and devices such as Paytm Soundbox, EDC, and QR, remains unaffected by the RBI's directive to its associate bank. Paytm plans to continue onboarding merchants, emphasizing that the Paytm Payment Gateway business for online merchants, as well as other financial services like loan distribution, insurance distribution, and equity broking, are unrelated to Paytm's associate bank and are expected to remain unaffected.
Regarding the RBI order's impact, Paytm assured users that it does not affect deposits in savings accounts, wallets, FASTags, and NCMC accounts, allowing users to utilize existing balances. The RBI has instructed PPBL to settle all pipeline transactions and nodal accounts (initiated on or before February 29, 2024) by March 15, 2024, with no further transactions permitted thereafter.
During the call, Mr. Sharma characterized the RBI order as a significant challenge but expressed confidence in overcoming it through partnerships with other banks and leveraging existing capabilities. He acknowledged the situation as a temporary setback, indicating the company's belief in navigating through it in the coming days or quarters.