Paytm CEO distances himself and One97 Communications from the embattled payments bank
In a recent development, Paytm founder and CEO Vijay Shekhar Sharma has asserted the independence of Paytm Payments Bank’s board in handling regulatory concerns. Sharma made this statement during a webinar launch of the company’s new soundboxes on April 22nd. He emphasized that neither he nor anyone from One97 Communications, Paytm’s parent company (also referred to as OCL), has any involvement with the payments bank.
“There is an independent board in place,” Sharma said during the event. “This board is highly capable and is handling all the process requirements. We have complete trust in the board and their direction, as well as the steps they are taking to move forward.”
Following RBI Directive, Sharma Resigns from Paytm Payments Bank Board
Sharma’s comments come a month after the Reserve Bank of India (RBI) imposed a restriction on Paytm Payments Bank, barring it from onboarding new deposit accounts or digital wallets. This action stemmed from the bank’s non-compliance with existing regulatory norms in January. In response to the RBI’s directive, Sharma stepped down from his position as the non-executive chairman and board member of Paytm Payments Bank in an effort to appease the central bank’s concerns.
During the virtual press meet, Sharma refrained from commenting on the future course of action for the payments bank, which recently witnessed the departure of its managing director and CEO, Surinder Chawla.
Merchant Migration to New PSP Bank Handles Completed
On a separate note, Sharma confirmed the completion of merchant migration from Paytm to new payment system provider (PSP) bank handles. He revealed that the system is currently operational with Yes Bank as its backend.
“The migration process for merchants to new PSP bank handles is complete,” Sharma informed. “The system is now functional with Yes Bank serving as the backend.”
He further clarified that Yes Bank holds the prerogative to conduct any additional due diligence procedures on the newly migrated merchants.
Paytm Partners with Multiple PSP Banks for Continuity
Earlier in April, the fintech giant announced the commencement of customer migration to partner PSP banks. These banks include Axis Bank, HDFC Bank, SBI, and Yes Bank.
“The core business model of Paytm remains unchanged,” Sharma explained. “In fact, this model is likely to be amplified due to our ability to collaborate more closely with a wider range of financial institutions and banks through these partnerships. Partnering with more banks enhances scalability and opens doors to new revenue opportunities for us.”
Paytm Launches New “Made in India” Soundboxes
The event also saw the unveiling of Paytm’s two new “Made in India” soundboxes, designed to facilitate UPI and credit card acceptance of UPI payments for merchants. These advanced devices boast 4G network connectivity, improved sound quality, extended battery life, and multilingual notification support in 11 Indian languages.
The launch comes amidst a period of challenges for the company. In April, reports indicated that the government deferred approval for Paytm’s INR 50 crore investment in its subsidiary, Paytm Payment Services. This decision stemmed from concerns regarding the shareholding of China-based Antfin in Paytm’s parent company.
Paytm Takes Steps to Address Regulatory Concerns
Paytm has undertaken several initiatives to address regulatory anxieties and restore trust. These efforts include restructuring the payments bank’s board and forging partnerships with PSP banks to ensure service continuity and the transfer of Paytm Payments Bank’s nodal account to these partner banks.
Paytm also secured a TPAP license last month, becoming the 25th company in India to do so. This license joins Paytm with competitors like Google Pay, PhonePe, and CRED.
Paytm Stock Takes a Hit
Paytm’s share price has witnessed a nearly 50% decline since the payments bank issues began in late January. The company’s shares closed 0.03% lower at INR 377.80 on the BSE on April 22nd.
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