Vijay Shekhar Sharma to the users:
Paytm’s founder, Vijay Shekhar Sharma, assured customers on Friday that the financial technology startup will carry on until February 29. This guarantee was given in response to worries expressed after the Reserve Bank of India ordered Paytm Payments Bank to stop taking new deposits, which had an effect on the fintech company’s overall operations. Paytm CEO Vijay Shekhar Sharma intervened in the wake of this setback to allay user concerns, stressing that current users will still be able to withdraw money and use balances in prepaid cards or wallets without any limitations.
The Reserve Bank of India issued a regulation requiring all banking operations to halt by the end of February. Sharma was prompted to convey the company’s will to continue operating in spite of the obstacles presented by the regulations.
These statements were made in response to the Reserve Bank of India’s prohibition on Paytm Payments Bank, a subsidiary of One 97 Communications. Vijay Shekhar Sharma, in a post on X, assured Paytm app users that the application would persist in its operations beyond February 29, 2024.
According to a statement released by the Reserve Bank of India (RBI), an audit study found “persistent non-compliances and ongoing significant supervisory concerns within the bank, requiring additional supervisory measures.” Notably, the RBI forbade Paytm Payments Bank from providing financial services after February 29 in its notification of January 31.
In his post, he assured Paytm users, saying, “For every Paytmer, your beloved app is operational and will continue seamlessly beyond February 29.” Expressing gratitude for user support, he thanked them and emphasized that the Paytm team is dedicated to ensuring app compliance as highlighted by the RBI.
I want to express my sincere gratitude, on behalf of the entire Paytm team, for your steadfast support. We sincerely hope to tackle issues and provide our country with complete compliance,” he said. He highlighted PaytmKaro as the front-runner in advancing these developments in the fintech industry and expressed hope about India’s sustained success in earning international acclaim for payment innovation and financial inclusion.
Paytm’s shares remained caught at a 20% lower circuit for the second day in a row on Friday following the RBI’s action.
In his remarks to the media on Thursday, Sharma mentioned that One97 Communications Ltd (OCL) works with multiple banks, one of which being Paytm Payments Bank. Going forward, the business has made it clear that it intends to work with other institutions, not just Paytm Payments Bank Ltd (PPBL).
In his capacity as Paytm’s spokesperson, he described the current state of affairs as more of a speed bump but expressed confidence in the cooperative efforts with banks and anticipated favorable developments in the coming days. He acknowledged being overwhelmed by the support from many big institutions and emphasized that, as they work with more banks, the Virtual Payment Address (VPA) needs to be changed. Sharma said that in the upcoming weeks, a decision to switch partner banks would be made.
According to a statement released by the central bank, an audit report found “persistent non-compliances and ongoing significant supervisory concerns within the bank, necessitating additional supervisory measures.” Sharma reassured users in a Friday morning message, saying that the Paytm app would “continue working beyond 29 February as usual.”
Bernstein analysts characterized the RBI directive as a bad development, pointing out that it made the company’s already-existing regulatory difficulties worse. They noted, “Paidtm Payments Bank’s operations are effectively terminated by the RBI’s actions.
Following this development, the company announced a temporary pause in its lending platform operations for a few weeks, concurrently engaging in discussions with banks for potential partnerships.
Bhavesh Gupta, COO of Paytm, mentioned, “We are in conversation with each lender addressing their concerns and clarifying the impact on the portfolio. They have raised questions, and we are providing detailed answers.”
The fintech firm anticipates an impact of Rs 300-500 crore due to the regulatory directive.
