One 97 Communications (OCL), the parent company of Paytm, saw its shares plummet by 20% as trading commenced. This significant drop came after the Re
One 97 Communications (OCL), the parent company of Paytm, saw its shares plummet by 20% as trading commenced. This significant drop came after the Reserve Bank of India (RBI) imposed stringent restrictions on Paytm’s payment services arm. The RBI directed Paytm Payments Bank (PPBL) to halt the onboarding of new customers immediately. Additionally, PPBL has been prohibited from accepting further deposits, credit transactions, or top-ups in any customer accounts, including prepaid instruments, wallets, FASTags, and NCMC cards, after February 29.
In response to the RBI’s actions, One 97 Communications stated in an exchange filing that PPBL is swiftly taking measures to comply with the RBI’s directives. The company assured that existing user deposits in savings accounts, wallets, FASTags, and NCMC accounts remain unaffected and can still be used.
Furthermore, OCL clarified its intention to accelerate plans to collaborate with other banks for payment products, completely moving away from reliance on Paytm Payments Bank. The company emphasized its commitment to expanding its payments and financial services business solely through partnerships with other banks.
Regarding the directive to terminate the nodal account of OCL and PPSL by February 29, 2024, the company confirmed plans to transition the nodal account to other banks within the specified timeframe. It also clarified that other financial services such as loan distribution, insurance distribution, and equity broking are unrelated to PPBL and are expected to continue unaffected.
Despite OCL’s response, investor confidence remained shaky, leading to a 20% decline in Paytm shares during early trading. The company’s market capitalization fell to ₹38,663 crore.
This recent development follows the RBI’s decision to halt PPBL’s onboarding of new customers, citing persistent non-compliance and material supervisory concerns identified by external auditors. Notably, this isn’t the first time PPBL has faced regulatory action. In March 2022, the RBI directed PPBL to halt new customer onboarding and conduct a comprehensive IT system audit. Earlier, in October 2021, PPBL was fined ₹1 crore for violating the Payment and Settlement Systems Act, 2007.
Under the RBI’s latest directive, PPBL is prohibited from accepting further deposits or credit transactions after February 29, 2024, except for interest, cashback, or refunds. The bank is also restricted from providing banking services such as fund transfers, BBPOU, and UPI facilities after the specified date. However, customers can continue to withdraw or utilize their balances without any restrictions until exhausted.
Furthermore, the nodal accounts of One 97 Communications and PPSL must be terminated by February 29, 2024. Settlement of all pending transactions initiated on or before this date must be completed by March 15, 2024, with no further transactions permitted thereafter.
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