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Tag: Paytm Payments Bank

  • Administrator likely to be appointed at Paytm Payments Bank after March 15

    Administrator likely to be appointed at Paytm Payments Bank after March 15

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    With less than a fortnight to go for Paytm Payments Bank to wind down its operations, highly placed sources in the banking circles say the bank could be the first significant instance in over two decades where the Reserve Bank of India may not hesitate to take a drastic step such as cancellation of its bank license. “If that be the case, an administrator could be appointed at the bank to oversee certain critical aspects,” said a person with knowledge of the matter.

    Failed transactions

    A move of this nature is likely after three–four instances of failed due diligence done on Paytm Payments Bank in a bid to take over its business. Being a deposit-taking entity, it is learnt that a few large banks, including a rival payments bank, are interested in Paytm’s wallet business and have shown interest in taking over Paytm Payments Bank. “However, with reports of inadequate KYC compliance looming over the bank, the interested parties stepped back,” said a banker aware of the matter.

    According to a few more sources, the regulator had sounded off the interested entities acquiring Paytm Payments Bank as they would be at their own risk and no dispensation on the compliance front would be extended to them. “This was a deterrent for any transaction to go through,” said the person quoted above.

    It may be noted that on February 26, the board of Paytm Payments Bank was reconstituted with new members and Vijay Shekar Sharma stepped down as the chairman of the bank. Subsequently, One97 Communications (OCL) terminated all its contracts with the bank. Sharma holds 51 per cent equity in Paytm Payments Bank, while the rest is held by OCL.

    Next steps

    Another banker added that, with the RBI explicitly mentioning in the FAQ dated February 16 that no credits can be made to Paytm Payment Bank’s savings account and no fresh deposits with partner banks through Paytm Payments Bank will be allowed after March 15, 2024, indicates that the bank is unlikely to be in existence for long.

    However, for depositors who may not have withdrawn or closed their accounts with the bank within the slated timelines, their sums will be transferred to ‘unclaimed deposits’ account under the “Depositor Education and Awareness” (DEA) Fund Scheme, 2014. The role of the administrator would be to ensure that any deposit claims made thereafter is satisfactory repaid to the depositors. As of March 31, 2023, Paytm Payments Bank held ₹3,285.27 crore of deposits, with ₹2,955.96 crore of deposits with 1–3 year maturity.

    License revocation likely

    Paytm Payments Bank faced with risk of license revocation after March 15

    Move likely as talks with 3 – 4 large banks for takeover fail

    Inadequate compliance by Paytm Payments Bank seen as reasons for failed takeover talks

    RBI may appoint an administrator to oversee unclaimed deposits after March 15

    Vijay Shekhar Sharma holds 51 per cent stake in Paytm Payments Bank; rest with One97 Communication

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  • Paytm advisory panel discussing terms of reference with company: Damodaran

    Paytm advisory panel discussing terms of reference with company: Damodaran

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    An advisory committee, set up by Paytm owner One97 Communications after the Reserve Bank’s action on its payments bank business, is at a stage of engagement with the company on matters related to the terms of reference for the panel, the panel’s head and former chairman of Sebi M Damodaran said.

    “We have been engaging with the group on matters relating to the Advisory Committee’s terms of reference,” Damodaran said on Sunday in response to a query about his engagement with Paytm.

    He said that the panel members are external advisors and at present Paytm is engaged in dealing with the RBI.

    On January 31, the RBI asked PPBL (Paytm Payments Bank Ltd) to stop further deposits, credit transactions, or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, and National Common Mobility Cards, after February 29. Later, the central bank extended the deadline till March 15.

    Paytm on February 9 announced setting up of a group advisory committee headed by Damodaran. The committee was set up to advise the company on strengthening compliance and on regulatory matters.

    Meanwhile, the Reserve Bank on Friday asked the National Payments Corporation of India (NPCI) to examine the possibility of migrating Paytm Payments Bank customers using the UPI handle ‘@paytm’ to 4-5 other banks, in a bid to prevent any disruptions in the payment ecosystem.

    Damodaran was speaking at the release of his biography ‘The Turmeric Latte’ compiled by one of his former colleagues.

    During a panel discussion at the event, when he was asked about his views on the functioning of Sebi at present, Damodaran said the capital markets regulator has bandwidth problems with respect to the large amount of issues that it has to handle.

    “Sebi has a huge challenge. The bandwidth seems inadequate to tackle the large number of issues that they have to tackle. In the process, it sometimes feels like they are biting more than they can chew,” Damodaran said.

    The book, curated by former Tripura cadre IAS officer Dinesh Tyagi who last served as Managing Director of CSC E-Governance, has contributions from former colleagues of Damodaran including former mines secretary Sushil Kumar.

    The book also mentions about “threats” received by Damodaran, when he was the joint secretary in the information and broadcasting ministry, for some decisions taken by him.

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  • India’s central bank extends some Paytm Payments Bank restrictions deadline to March 15 | TechCrunch

    India’s central bank extends some Paytm Payments Bank restrictions deadline to March 15 | TechCrunch

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    India’s central bank extended the deadline for some of the business restrictions it’s imposing on Paytm’s Payments Bank to March 15 from February 29, giving the Indian financial services firm an additional 15 days to comply with the rules but squashing chances of any major concessions.

    The Reserve Bank of India said Friday that Paytm Payments Bank, an associate firm of the Indian financial services firm that processes the group’s transactions, will be barred from accepting customer deposits, credit transactions and top ups in bank account, prepaid instruments, wallets, FASTags from March 15, 2024.

    The update follows the RBI widening its curbs on Paytm’s Payments Bank late last month, an update that has wiped Paytm’s market cap by 55% to $2.6 billion in the 16 days since. Paytm, which serves more than 15 million merchants and 330 million wallet customers, went public in 2021 at a valuation of $20 billion. Its cash balance at December’s closure last year stood at more than $1 billion.

    The central bank said in a statement that it was extending the deadline in the “interest of customers (including merchants) of PPBL who may require a little more time to make alternative arrangements and the larger public interest.”

    Many other payments bank’s services will be permitted until March 15 instead of the earlier February 29 deadline, the central bank said (PDF). The RBI also published an FAQ (PDF), detailing how the embargo on Paytm’s Payments Bank will impact merchant and customers. In the FAQ, the central bank said merchants using Paytm’s QR code, soundbox and point-of-sale terminal devices will not be impacted by the disruption at Paytm, provided those machines and instruments are linked to other bank accounts.

    In its order late last month, the RBI directed Paytm as well as Paytm Payments Bank to terminate their nodal accounts not later than February 29. In the clarification posted Friday, the RBI said it’s maintaining the same deadline for the cancellation of nodal accounts, required by payments firms to facilitate transactions. (Paytm said early this month that it plans to tieup with multiple banks and use their nodal accounts.)

    Earlier this week, Macquarie dramatically cut its 12-month price target on Paytm, citing risks of customers leaving the platform in the wake of heightened regulatory scrutiny. Macquarie, which famously predicted the slump at Paytm before the listing, lowered its target to 275 rupees, the most brutal by any major brokerage firm. Shares of Paytm closed trading at 341 Indian rupees, or $4.11, Friday.

    Check back for updates as the story develops.

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    Manish Singh

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  • India’s Paytm is in flux | TechCrunch

    India’s Paytm is in flux | TechCrunch

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    Shares of Paytm plunged 10% on Monday, the third consecutive session of declines, touching an all-time low of 438.35 Indian rupees (or $5.28) after the RBI’s clampdown last week looks to have had a more extensive impact than previously anticipated.

    The trading was halted after Paytm’s shares fell 10%, the artificial limit put on its daily trade by the local exchanges. Even as Paytm initially anticipated RBI’s decision to have a maximum annual impact of $60 million to its business, the financial services firm has shed about $2.5 billion in its market cap in three days, or more than 40% of its value since Wednesday close. (Paytm’s market cap on Monday stood at $3.35 billion, below the $3.4 billion valuation at which it raised capital from Ant Financial in 2015 and far below its IPO valuation of $20 billion. More on numbers here.)

    The Reserve Bank of India (RBI) last week widened its curbs on Paytm’s Payments Bank, which processes transactions for Paytm, barring it from offering many banking services, including accepting fresh deposits and credit transactions across its services. In response, Paytm initially said it will terminate business with its affiliate and seek partnership with other banks.

    However, uncoupling Paytm from its affiliated Paytm Payments Bank appears to engender additional difficulties, both technical and perceptual.

    Shares of ubiquitous financial services firm Paytm, which went public in 2021. (Images, data: Yahoo Finance)

    TechCrunch first reported last week that the RBI is considering canceling Paytm’s Payments Bank license. In early 2018, when Paytm received the Payments Bank license – which allows the holder to offer customers a savings account of up to $2,400 – it had to surrender its PPI license, the permit required to operate the wallet business.

    Paytm Payments Bank houses more than 330 million wallet customers and Paytm cannot transition them to a different banking partner until the central bank returns the firm its PPI license. And it’s unclear if the central bank – which has been uncharacteristically strong-worded in its penalty order on Paytm – will make any concessions by the deadline (February 29). Indian daily Hindu Businessline reported on Sunday that Paytm is trying to sell the wallet business.

    And that is not the only other license at stake. As Bengaluru-based fintech investor Osborne Saldanha adds:

    The obvious, direct impact is that Paytm’s payment banking operations will be halted until RBI releases further instructions. It is however unclear if RBI will allow Paytm to ever resume payment banking operations even post compliance with RBI’s requirements as the notification does state any remedial clauses. It’s entirely possible that RBI may cancel Paytm’s payment banking license altogether. If that happens, bear with me as I’m not able to conclusively decipher, but it seems Paytm might not even have a payment aggregator license, as the payment aggregator license would have resided in the payment bank license and Paytm’s application for a payment aggregator license was returned by RBI.

    In its notification last week. the RBI said Paytm’s “persistent” noncompliance with an earlier order — from March 2022, when the RBI ordered Paytm to stop adding customers to Payments Bank — raised supervisory concerns and warranted further actions. The RBI said an audit found the instances of noncompliances, but didn’t go into details.

    The local media reported last week that Paytm Payments Bank was riddled with issues such as money-laundering and that India’s crime-fighting agency Enforcement Directorate was probing the firm. Paytm declined (PDF) that the ED was conducting any investigation, and in a townhall with employees on Saturday, Paytm’s senior executives assured that the issues reported in media were “old” and had been fixed “long back,” TechCrunch first reported.

    As we attempt to understand the full extent of the potential damage from the RBI’s initial ruling to Paytm, the company is already beginning to bleed customers and merchants. As Macquarie analyst Suresh Ganapathy pointed out on an analyst call last week, many Paytm customers are already harbouring the belief that Paytm is defunct.

    The ongoing episode with Paytm is also shaking the confidence of investors in the Indian fintech market. The RBI has introduced a series of regulatory changes — or clarifications —  in the last three years and fintech as a sector was already becoming hostile for many VCs.

    “I believe this action against Paytm is precedent-setting, harsh and impacts the broader financial services ecosystem in India. I don’t remember the last time RBI canceled the license of a bank for reasons other than adequate capital requirements,” Saldanha added.

    Bipin Singh, co-founder of financial services firm MobiKwik, defended the RBI’s rationale: “Having worked with the regulator closely over the last decade or so, I can say conclusively that RBI is neither against innovation nor against fintechs. If they were, we wouldn’t have the huge fintech ecosystem in India today. Compliance, however, is not negotiable,” he tweeted.



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    Manish Singh

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  • No investigation by ED: Paytm

    No investigation by ED: Paytm

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    One97 Communications, the parent company of Paytm, on Sunday clarified that there has been no investigation by the Enforcement Directorate on the company, its associates and/or its founder and CEO for anti-money laundering activities.

    “Neither the company nor its founder and CEO are being investigated by the Enforcement Directorate regarding inter alia money laundering. In the past, certain merchants/users on our platforms have been subject to enquiries and on those occasions, we have always cooperated with the authorities. During any such investigations by the authorities on any set of merchants/users in the past, we have cooperated with them on these investigations. This has been previously disclosed to the stock exchanges,” One97 said in a stock exchange filing.

    “We would like to set the record straight and deny any involvement in anti-money laundering activities. We have and continue to abide by Indian laws and take regulatory orders with utmost seriousness,” it added.

    The clarification comes amid media reports that claimed that the recent action by the RBI was linked to investigations by the ED.



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