Image for representational purposes only.
| Photo Credit: REUTERS

Fintech firm One97 Communications, which owns the Paytm brand, on May 22 said its loss in the fourth quarter of the financial year 2023-24 has widened to ₹550 crore.

The company had posted a loss of ₹167.5 crore in the same period a year ago, the company said in a regulatory filing.

The revenue from operations of Paytm declined 2.8% to ₹2,267.1 crore during the reported quarter, from ₹2,464.6 crore in the corresponding quarter of the financial year 2023.

For the year ended March 31, 2024, the company’s loss narrowed to ₹1,422.4 crore. Paytm had recorded a loss of ₹1,776.5 crore in FY23.

The annual revenue of Paytm increased by about 25% to ₹9,978 crore for FY24, from ₹7,990.3 crore in FY23.

The Reserve Bank of India (RBI) barred Paytm Payments Bank Limited (PPBL) from accepting deposits, credit transactions or top-ups in any customer accounts, wallets, and FASTags, keeping in view the interest of customers, including merchants from March 15 onwards.

Paytm had estimated a ₹300-500 crore loss due to the RBI’s restriction on PPBL.

Paytm, on February 9, announced setting up of a group advisory committee to advise the company on strengthening compliance and on regulatory matters.
| Photo Credit: The Hindu

Shares of Paytm owner One97 Communications jumped 5% in the morning trade on February 26 after Reserve Bank of India (RBI) asked retail payment settlement body NPCI to examine the possibility of migrating Paytm Payments Bank customers using ‘@paytm’ UPI handle to other banks.

The stock of crisis-hit fintech company climbed 5% each to ₹428.10 and ₹427.95 apiece — also its upper circuit limit — on the NSE and BSE.

In the morning trade, the 30-share BSE Sensex benchmark slumped 288.71 points or 0.39%, while NSE Nifty fell 71.55 points to 22,141.15. On February 23, the scrip of One97 Communications rallied 5% and locked in upper circuit limit on the BSE.

In a bid to prevent any disruptions in the payment ecosystem, the RBI 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 four to five other banks.

The Central bank came out with additional steps for the benefit of customers, wallet holders and merchants who are availing banking services from Paytm Payments Bank, which has been barred from accepting deposits and credits after March 15, 2024.

“As the PPBL cannot accept further credits into its customer accounts and wallets after March 15, 2024, certain additional steps have become necessary to ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the bank, and minimise concentration risk in the UPI system by having multiple payment app providers,” the RBI said in a statement.

“NPCI has been advised by the RBI to examine the request of One97 Communication Limted (OCL) to become a Third-Party Application Provider (TPAP) for UPI channel for continued UPI operation of the Paytm app, as per the norms,” it said.

Meanwhile, an advisory committee, set up by 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 Securities and Exchange Board of India M. Damodaran on February 25 said, “We have been engaging with the group on matters relating to the Advisory Committee’s terms of reference.” 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 Limited) 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. One97 Communications Ltd (OCL) holds a 49% stake in PPBL.

A file photo of M. Damodaran, former Chairman, Securities and Exchange Board of India (SEBI).
| Photo Credit: SOMASHEKARA GRN

An advisory committee, set up by Paytm owner One97 Communications after the Reserve Bank of India’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 SEBI chairman M. Damodaran said.

“We have been engaging with the group on matters relating to the Advisory Committee’s terms of reference,” Mr. Damodaran said on February 26 in response to a query about his engagement with Paytm. He said that the panel members are external advisors and presently Paytm is engaged in dealing with the RBI.

Mr. Damodaran is the head of Paytm’s group advisory committee which will advise the company on strengthening compliance and on regulatory matters. The committee was set up on February 9.

Also read: Paytm Payments Bank meltdown, its meaning | Explained

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.

Meanwhile, the Reserve Bankb on Feb, 23 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.

Mr. 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 current functioning of SEBI, he 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,” he said.

Paytm said its associate Paytm Payments Bank Limited does not undertake outward foreign remittances.
| Photo Credit: Reuters

“The Enforcement Directorate (ED) has questioned senior Paytm executives and taken submission of documents from them following the recent Reserve Bank of India (RBI) action of barring Paytm Payments Bank Limited from accepting deposits or top-ups in any customer account,” official sources said on February 15.

The Central agency, according to the sources, is conducting preliminary examination of documents before it decides to launch a formal investigation into the RBI-flagged alleged irregularities at the fintech company under the Foreign Exchange Management Act (FEMA).

“Some documents have been recently submitted by Paytm executives following which they were asked certain questions. Some more information has been sought,” the sources said.

The Paytm Payments Bank debacle | Explained

“As of now, no irregularities have been detected and a case under FEMA will only be registered once any contravention under the said law is found,” they added. “An investigation under the Prevention of Money Laundering Act (PMLA) involving Paytm is already going on for some time,” they said.

One97 Communications, which provides financial services under the Paytm brand, and its banking arm Paytm Payments Bank have been receiving notices and requests for information with respect to customers of the respective entities, an exchange filing by the company said on February 14.

Paytm said its associate Paytm Payments Bank Limited does not undertake outward foreign remittances.

“One 97 Communications Limited (OCL), its subsidiaries and its associate, Paytm Payments Bank Limited, have over time been receiving notices and requisition for information, documents and explanations from the authorities, including Enforcement Directorate (ED), with respect to the customers that may have done business with the respective entities, and provided the required information, documents and explanations to the authorities,” Paytm said in a regulatory filing.

Paytm said the company and its associate have continued to provide information, documents and explanations to the authorities as required by them.

Also read: Paytm sees ₹300-500 crore blow as customers won’t be able to top up wallets, PPBL accounts

Earlier this month, the Enforcement Directorate and the Financial Intelligence Unit (FIU) asked the RBI to share its report on the recent action taken to bar Paytm Payments Bank Limited from accepting deposits or top-ups in customer accounts, according to sources.

The Central bank, on January 31, directed it to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags and other instruments after February 29.

The ED has been probing Paytm and other online payment wallets as part of its money-laundering investigation against Chinese-controlled mobile phone apps who allegedly laundered funds using merchant IDs created on these fintech platforms.

The FIU has also sought the report from the RBI to analyse whether Paytm or PPBL followed the required procedures as a “reporting entity” under section 13 of the PMLA.

Under this section of the anti-money laundering law, a financial institution, bank or intermediary has to furnish details to the FIU about maintaining records of all transactions and documents evidencing identity of its clients and beneficial owners as well as account files and business correspondence relating to its clients.