Paytm expects worst impact of INR 300-500 Cr on annual operating profit post RBI order

The RBI’s order to stop almost all services of Paytm Payments Bank after February 29 will have an impact of Rs 300-500 crore on the company’s annual operating profit.

Also read: Paytm hits RBI curbs, shares fall 20%

The central bank on Wednesday banned Paytm from accepting deposits or recharges from any customer account, prepaid instruments, wallets and FASTags after February 29, 2024.

The action against Paytm Payments Bank Ltd (PPBL) follows a comprehensive system audit report and subsequent compliance verification report by external auditors.

“Depending on the nature of the resolution, the company expects this action to have a worst-case impact of Rs 300-500 crore on its future annual EBITDA. However, the company expects to continue to improve profitability,” Paytm said in a regulatory statement ​​Represented in the file.

One97 Communications Ltd (OCL), which owns the Paytm brand, holds 49 per cent stake in PPBL but classifies it as an associate of the company rather than a subsidiary.

“OCL, as a payments company, has partnered with multiple banks, not just Paytm Payments Bank, for various payment products. Since the embargo began, OCL started partnering with other banks. We will now accelerate our plans and move entirely to partnering with other banks partners. Going forward, OCL will only partner with other banks and not with PPBL,” Paytm said.

On March 11, 2022, the Reserve Bank of India immediately banned PPBL from accepting new customers.

“OCL’s next phase is to continue to expand its payments and financial services operations, but only in partnership with other banks,” the filing said.

Paytm said PPBL is taking immediate steps to comply with the RBI’s directives, including working with regulators to address their concerns as soon as possible.

“The company has been informed that this will not affect deposits in users’ savings accounts, wallets, FASTags and NCMC accounts and they can continue to use their existing balances,” the document said.

Paytm payment gateway business (online merchants) will continue to provide payment solutions to its existing merchants.

“OCL’s offline merchant payment network products (such as Paytm QR, Paytm Soundbox, Paytm Card Machine) will continue as usual, and new offline merchants can also be introduced,” the document said.

The RBI also said that the “node accounts” of OCL and Paytm Payments Services (PPSL) will be terminated at the earliest and in any event not later than February 29, 2024. The document states that OCL and PPSL will transfer nodes to other banks during this period.

“OCL will look to partner with various other banks to offer various payment products to its customers,” Paytm said.

The company said its financial services such as loan distribution, insurance distribution and equity broking have no connection with PPBL and do not expect to be affected by this direction.

(This story has not been edited by News18 staff and is published from associated news agency – PTI)