‘RBI order a speed bump, app to continue working beyond Feb 29,’ says Paytm & One97 CEO Vijay Shekhar Sharma

Paytm CEO Vijay Shekhar Sharma has put out a statement, reassuring users that the digital payments and services app will continue to operate without disruption beyond February 29, despite the Reserve Bank of India (RBI) imposing restrictions on Paytm Payments Bank Limited (PPBL). The RBI has prohibited PPBL from accepting deposits or top-ups in customer accounts, prepaid instruments, wallets, and FASTags, among other services, after February 29, 2024. In a social media post, Sharma, who is also the founder and CEO of One97 Communications Limited (OCL), the parent company of Paytm, emphasized the company’s commitment to serving the nation in full compliance. He acknowledged the support of Paytm users and stated, “For every challenge, there is a solution, and we are sincerely committed to serving our nation in full compliance.”

To every Paytmer,
Your favourite app is working, will keep working beyond 29 February as usual.
I with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full…

— Vijay Shekhar Sharma (@vijayshekhar) February 2, 2024

While OCL holds a 49 per cent stake in PPBL, it classifies it as an associate rather than a subsidiary. Sharma expressed gratitude for the support received from Paytm users and assured them that the app will continue working seamlessly. During an earnings call on February 1, the Paytm top management discussed working on a migration plan for PPBL, wallet, FASTag, and other users with alternative banks. The RBI’s directive is anticipated to impact Paytm’s annual operational profit by Rs 300-500 crore, as customers will be unable to add money to their wallets and other services. Paytm clarified that its offline merchants network, device business, and other financial services such as loan distribution, insurance distribution, and equity broking are not affected by the RBI’s direction to its associate bank. The company also stated that the Paytm Payment Gateway business will continue offering payment solutions to existing merchants. The RBI’s order does not impact user deposits in savings accounts, wallets, FASTags, and National Common Mobility Card (NCMC) accounts, allowing users to continue using their existing balances. PPBL has been instructed to settle all pipeline transactions and nodal accounts by March 15, 2024, with no further transactions permitted thereafter. Sharma described the RBI order as a “big speed bump” during the call, expressing confidence that, with the partnership of other banks and existing capabilities, Paytm will overcome the challenges in the coming days or quarters. (With inputs from agencies)