Paytm sees Rs 300-500 cr blow as customers won't be able to top up

Fintech firm Paytm sees an impact of Rs 300-500 crore on its annual operational profit as its customers will not be able to add money to their wallets, FASTags etc. as RBI barred Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups in any customer account.Paytm founder and CEO Vijay Shekhar Sharma said that RBI order is a "big speed bump" and shared that he could not understand the trigger for the move. "On behalf of Paytm, I can say it is more of a big speed bump but it is something that we believe that with partnership of other banks and capabilities that we have already developed, we will be able to see through in the next few days or quarters as the case will be," he said during an investors call.
The central bank on Wednesday barred PPBL from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024.Till then, customers can add money as well as withdraw money from the Paytm wallet and PPBL account. Sharma said, going forward, One97 Communications Ltd (OCL) will be working only with other banks, and not with PPBL.RBI said the action against PPBL followed a comprehensive system audit report and subsequent compliance validation report of external auditors."OCL has already been working with other banks since the last 2 years especially when embargo had come to the Payments bank. We continue to decline and decrease slant wise dependency on Paytm Payments Bank," Sharma said.
One97 Communications Ltd (OCL), which owns Paytm brand, holds a 49 per cent stake in PPBL but classifies it as an associate of the company and not as a subsidiary."Depending on the nature of the resolution, the company expects this action to have a worst case impact of Rs 300-500 crore on its annual EBITDA going forward. However, the company expects to continue on its trajectory to improve its profitability," Paytm said in a regulatory filing.The company has said that it will move services being offered through PPBL and Paytm Wallet -- which is part of PPBL -- to other partner banks. The Paytm management denied any consideration of hiving off the wallet or any structural changes in PPBL.