Paytm Payments Bank Limited (PPBL), an associate of OCL (One 97 Communications Limited), has received RBI directions under section 35A of the Banking Regulation Act, 1949. The company has announced that it will expand its existing relationships with leading third-party banks to distribute payments and financial services products.
RBI directions and user deposits
According to a press release by RBI on January 31, 2024, PPBL has been given further directions under section 35A, which empowers the central bank to issue directions to any banking company or banking companies in the public interest. PPBL is taking immediate steps to comply with RBI directions, including working with the regulator to address their concerns as quickly as possible.
The company has assured that this does not impact user deposits in their savings accounts, Wallets, FASTags, and NCMC accounts, where they can continue to use the existing balances.
OCL’s payments and financial services business
OCL, as a payments company, works with various banks (not just Paytm Payments Bank), on various payments products. OCL started to work with other banks since the start of the embargo. “We now will accelerate the plans and completely move to other bank partners. Going forward, OCL will be working only with other banks, and not with Paytm Payments Bank Limited. The next phase of OCL’s journey is to continue to expand its payments and financial services business, only in partnerships with other banks. We offer acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships,” Paytm said in an official statement .
The Paytm Payment Gateway business (online merchants) will continue to offer payment solutions to its existing merchants. OCL’s offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine, will continue as usual, where it can onboard new offline merchants as well.
With regard to the direction on termination of nodal account of OCL and Paytm Payments Services Limited (PPSL) by February 29, 2024, OCL and PPSL will move the nodal to other banks during this period. OCL will pursue partnerships with various other banks, to offer various payment products to its customers.
OCL’s other financial services such as loan distribution, insurance distribution and equity broking are not in any way related to Paytm Payments Bank Limited and are expected to be unaffected by this direction.
No margin loans or pledged shares by founder
The company also clarified that there are no margin loans or pledged shares by its founder Vijay Shekhar Sharma. “We would like to reiterate that there are no margin loans or pledged shares by our founder Vijay Shekhar Sharma. He continues to hold over 14% stake in One97 Communications Ltd,” it said.
Paytm is India’s leading digital payments and financial services platform that offers full-stack payments & financial solutions to consumers, offline merchants and online platforms. The company is on a mission to bring half a billion Indians into the mainstream economy through payments, commerce, banking, investments, and financial services.