Paytm CEO Vijay Shekhar Sharma
Paytm CEO Vijay Shekhar Sharma reassured users on Friday, addressing concerns after the banking arm of Paytm was directed to cease accepting fresh deposits by the Reserve Bank of India in a recent regulatory action.
The Reserve Bank of India (RBI) imposed restrictions on the business activities of Paytm Payments Bank on Wednesday, instructing it to halt all banking operations by the end of February. However, existing customers were assured the freedom to withdraw funds and use prepaid cards or wallets without any restrictions.
The RBI, in a statement, cited an audit report revealing “persistent non-compliance and ongoing significant supervisory concerns within the bank, necessitating additional supervisory measures.”
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In response to these developments, Vijay Shekhar Sharma stepped in on Friday, stating that Paytm’s app will continue to “keep working beyond 29 February as usual.” This statement aimed to allay any fears users may have had regarding the functionality of the Paytm app.
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
Analysts at Bernstein have labeled the RBI directive as a negative development, emphasizing that it further contributes to an already substantial regulatory burden on Paytm’s business. They noted, “Effectively, the RBI’s actions bring an end to the operations of Paytm Payments Bank.”
Following this announcement, Paytm stated that it has temporarily halted its lending platform operations for a few weeks. Simultaneously, the company is actively engaging in discussions with banks to form partnerships.
Bhavesh Gupta, COO of Paytm, mentioned, “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.” This reflects Paytm’s efforts to address concerns and maintain transparency with its lending partners amid the regulatory changes.
In a conference call with analysts, Paytm CEO Vijay Shekhar Sharma stated, “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 anticipates an impact of Rs 300-500 crore due to the regulatory directive. This acknowledgment reflects the financial implications that Paytm foresees as a result of the recent actions by the Reserve Bank of India (RBI).
