The logo of the Paytm app. File
| Photo Credit: Reuters

Fintech firm One97 Communications, owner of the Paytm brand, is laying off an undisclosed number of employees and claimed that it is providing outplacement support for their smooth transition, according to a company statement.

Paytm’s sales employee headcount in the March 2024 quarter dropped by about 3,500 to 36,521 personnel on a quarter-on-quarter basis, mainly due to the impact of the Reserve Bank of India’s (RBI) ban on services of Paytm Payments Bank.

“One97 Communications Limited (OCL) is providing outplacement support to employees who have resigned as a part of the restructuring efforts by the company. The company’s human resource teams are actively collaborating with over 30 companies that are currently hiring, and providing assistance to employees who have opted to share their information, facilitating their immediate outplacement,” the company said on June 10.

Paytm did not disclose the number of employees impacted by the restructuring. “Paytm is also disbursing bonuses which were due to employees, ensuring fairness and transparency in the process,” the statement said.

Paytm has reported a widening loss to ₹550 crore in January-March 2024, after the baned transactions related to its payments bank.

The RBI had 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.

The company had posted a loss of ₹167.5 crore in the same period a year ago. “As part of its FY24 earnings release, One97 Communications stated that it will be pruning its non-core business lines, and will continue its efforts to maintain a leaner organisation structure through AI-led interventions. The company has been actively working towards driving profitability, in line with its guidance,” the statement said.

New Delhi:

Digital payments firm Paytm posted a wider loss in the fiscal fourth quarter on Wednesday, hurt by weakness in its payments and financial services business after the central bank shut down its banking unit.

The company’s consolidated net loss was at Rs 5.5 billion as it took an impairment of Rs 2.27 billion towards scaling down the business of Paytm Payments Bank.

Paytm had reported a loss of Rs 1.68 billion a year ago in the March-quarter.

Meanwhile, its consolidated revenue from operations fell to Rs 22.67 billion ($272.3 million) for the January-March quarter from Rs 23.35 billion a year earlier.

The Reserve Bank of India had ordered Paytm Payments Bank, an associate of Paytm, to stop accepting fresh deposits in its accounts or digital wallets from March, raising concerns about revenue from the company’s main payments business.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

The board of India’s Paytm Payments Bank is independent and capable of addressing regulatory concerns, the chief executive officer of digital payments firm Paytm, formally known as One97 Communications Ltd, (OCL) said on Monday.

“I, personally or anyone from OCL, have no connection with the payments bank,” Vijay Shekhar Sharma said at a webinar.

“There is an independent board taking care of everything and we have full faith in their capability.”

The Reserve Bank of India (RBI) in late January had ordered Paytm Payments Bank to stop accepting new deposits in its accounts or digital wallets from March, citing supervisory concerns and persistent non-compliance with rules.

Paytm Payments Bank’s parent is One 97 Communications, popularly known as Paytm for its digital payments app.

One97 owns 49% in the payments bank, while Mr Sharma holds the remaining 51%.

In February, following the RBI’s order, Mr Sharma stepped down as non-executive chairman and board member of Paytm Payments Bank.

 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Surinder Chawla. File photo: paytmbank.com

Beleaguered Paytm Payments Bank’s managing director and CEO Surinder Chawla has resigned from the company, a regulatory filing said on April 9.

Mr. Chawla’s resignation comes amidst Paytm Payments Bank facing prohibitory action from banking regulator RBI.

Also read: The Paytm Payments Bank debacle | Explained

“Surinder Chawla, Managing Director and CEO of PPBL, has tendered his resignation on April 8, 2024, on account of personal reasons and to explore better career prospects. He will be relieved from PPBL w.e.f. close of business hours on June 26, 2024, unless changed by mutual consent,” One97 Communications, Paytm brand owner, said in a regulatory filing.

Mr. Chawla joined PPBL in January last year after the payments bank received approval from the Reserve Bank of India.

In a major action against Paytm Payments Bank (PPBL), RBI, on January 31, directed it to stop accepting deposits or top-ups in any customer accounts, wallets, FASTags and other instruments after February 29. Subsequently, the deadline was extended to March 15.

The direction follows persistent non-compliance and continued material supervisory concerns, the central bank had said in a statement.

On March 11, 2024, the RBI barred PPBL from onboarding new customers with immediate effect.

Following regulatory actions, promoter Vijay Shekhar Sharma last month stepped down as part-time non-executive Chairman of Paytm Payments Bank Limited, and the board of the bank has been reconstituted.

Former Central Bank of India chairman Srinivasan Sridhar, former Bank of Baroda Executive Director Ashok Kumar Garg, and two retired Indian Administrative Service (IAS) officers were inducted on the board of the bank.

One97 Communications Limited (OCL) holds a 49% stake in PPBL.

Paytm said nearly all agreements between the company and PPBL have been terminated as per a disclosure on March 1, 2024, and the board of PPBL has been reconstituted with five independent directors including an independent chairperson, and no nominees from the company, as per its disclosure on February 26, 2024.

“In line with our ongoing efforts, the company continues to collaborate with banking partners to enhance our merchant acquiring and UPI services,” the filing said.

The National Payments Corporation of India on Thursday granted One97 Communications Ltd the approval to participate in UPI as a Third-Party Application Provider (TPAP) under the multi-bank model.

Axis Bank, HDFC Bank, State Bank of India, and YES Bank will act as Payment System Provider (PSP) banks to Paytm.

Paytm, a major player in India’s fintech scene, is facing a setback as its banking arm, Paytm Payments Bank Ltd (PPBL), is stopping key services from today. This comes after the Reserve Bank of India imposed restrictions on the bank, citing serious rule violations. Customers relying on digital payments are advised to find alternative banking solutions.

These services to stop from today:

• Paytm Payments Bank customers can no longer deposit money into their accounts, but can still withdraw or transfer funds.
• Users will no longer get salary credits, direct benefit transfers, and subsidies in their Paytm Payments Bank account, but will still continue to get refunds, cashbacks, and sweep-ins from partner banks.
• Users cannot top-up their wallets or transfer funds from their Paytm wallet, however, they can still use the money in their wallet to pay bills.
• Customers will not be able to recharge their FASTag issued by the Paytm bank.
• Recharging NCMC cards from Paytm Bank will not be possible. 
• Users won’t be able to transfer funds into Paytm Payments Bank accounts through UPI or IMPS.
• Customers can still use their Paytm balance to pay for subscriptions, but they will have to use a different bank account from March 15.

However, the Paytm app will keep running even after March 15. Your services will not be affected if you do not have a Paytm Payments Bank account. You can still use UPI services through the Paytm app, as long as it is linked to another bank. 

Paytm’s parent company, One97 Communications, got approval from the National Payments Corporation of India (NPCI) to continue offering UPI services as a Third-Party Application Provider (TPAP). Under this new setup, Paytm will partner with banks like SBI, Yes Bank, Axis Bank, HDFC Bank, etc, which will handle payment services for Paytm users. 

You can keep using the Paytm app for all your bill payments and recharges. Your Paytm QR code, soundbox, and the card machine will also remain operational.

Paytm FASTag users can continue to use the existing balance to pay tolls beyond the stipulated date. File
| Photo Credit: Reuters

National Highways Authority of India (NHAI) has advised Paytm FASTag users to obtain a new FASTag from another bank before March 15 to ensure a smooth travel experience and avoid inconvenience at toll plazas, an official statement said on March 13.

This will help avoid penalties or double fee charges while commuting on National Highways, as per the statement.

Following the Reserve Bank of India’s guidelines on restrictions concerning Paytm Payments Bank, the statement said Paytm FASTag users will no longer have the option to recharge or top-up their balance after March 15, 2024.

However, they can continue to use the existing balance to pay tolls beyond the stipulated date, it added.

NHAI also advised Paytm FASTag users to reach out to their respective banks or refer to the FAQs provided on the IHMCL (Indian Highway Management Company Limited) website.

The Financial Intelligence Unit-India has slapped a ₹5.49 crore penalty on Paytm Payments Bank Limited (PPBL) for violations of the Prevention of Money Laundering Act (PMLA).
| Photo Credit: GIRI KVS

The Financial Intelligence Unit-India has slapped a ₹5.49 crore penalty on Paytm Payments Bank Limited (PPBL) for violations of the Prevention of Money Laundering Act (PMLA), after finding substantial proof of money generated from illegal activity being routed through accounts held by some entities with the bank. 

The FIU-IND had initiated a review of the PPBL’s operations after receiving “specific information” from law enforcement agencies about a few entities and their network of businesses engaging in “a number of illegal acts, including organising and facilitating online gambling”, the agency said in a statement on March 1 about the penalty order issued on February 15. 

The Paytm Payments Bank debacle | Explained

“Further, the money generated from these illegal operations, i.e. proceeds of crime were routed and channelled through bank accounts maintained by these entities with the Paytm Payments Bank Ltd,” it said.

Documents pertaining to such activity were scrutinised and a Show Cause Notice was served on the bank for violating multiple regulations laid down in the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. These included breaches of the rules pertaining to safeguards to be adopted for Anti-Money Laundering, Counter-Terrorism Financing and Know Your Customer or KYC processes for beneficiary accounts and payout services.

“After considering the written and oral submissions of the Paytm Payments Bank Ltd, Director, FIU-IND, based on the voluminous material available on record, found that the charges against Paytm were substantiated,” the agency said, adding that a monetary penalty of ₹5.49 crore was imposed in an order passed under Section 13 of the PMLA.

Paytm Payments Bank meltdown, its meaning | Explained

The FIU is India’s national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions to enforcement agencies and its foreign counterparts.

A PPBL spokesperson said, “The penalty pertains to issues within a business segment that was discontinued two years ago. Following that period, we have enhanced our monitoring systems and reporting mechanisms to the Financial Intelligence Unit (FIU).”

The Financial Intelligence Unit-India has slapped a ₹5.49 crore penalty on Paytm Payments Bank Limited (PPBL) for violations of the Prevention of Money Laundering Act (PMLA).
| Photo Credit: GIRI KVS

The Financial Intelligence Unit-India under the Union Finance Ministry has slapped a ₹5.49 crore penalty on Paytm Payments Bank Limited (PPBL) for violations of the Prevention of Money Laundering Act (PMLA), after finding substantial proof of money generated from illegal activity being routed through accounts held by some entities with the bank. 

The FIU-IND had initiated a review of the PPBL’s operations after receiving “specific information” from law enforcement agencies about a few entities and their network of businesses engaging in “a number of illegal acts, including organising and facilitating online gambling”, the agency said in a statement on Friday about the penalty order issued on March 1, 2024.

The Paytm Payments Bank debacle | Explained

“Further, the money generated from these illegal operations, i.e. proceeds of crime were routed and channelled through bank accounts maintained by these entities with the Paytm Payments Bank Ltd,” it said.

Documents pertaining to such activity were scrutinised and a Show Cause Notice was served on the bank for violating multiple regulations laid down in the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. These included breaches of the rules pertaining to safeguards to be adopted for Anti-Money Laundering, Counter-Terrorism Financing and Know Your Customer or KYC processes for beneficiary accounts and payout services.

“After considering the written and oral submissions of the Paytm Payments Bank Ltd, Director, FIU-IND, based on the voluminous material available on record, found that the charges against Paytm were substantiated,” the agency said, adding that a monetary penalty of ₹5.49 crore was imposed in an order passed under Section 13 of the PMLA.

Paytm Payments Bank meltdown, its meaning | Explained

A PPBL spokesperson said, “The penalty pertains to issues within a business segment that was discontinued two years ago. Following that period, we have enhanced our monitoring systems and reporting mechanisms to the Financial Intelligence Unit (FIU).”

The FIU is India’s national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions to enforcement agencies and its foreign counterparts.

New Delhi:

Paytm CEO Vijay Shekhar Sharma on Monday resigned as non-executive chairman and board member of Paytm Payments Bank, amid ongoing regulatory challenges faced by the digital payments giant. The decision follows a series of measures imposed by the Reserve Bank of India (RBI), including an order for Paytm Payments Bank to wind down operations by March 15 due to persistent compliance issues and supervisory concerns.

The RBI’s action against the payments bank stemmed from various concerns, including inadequate customer identity checks and a perceived lack of arms-length distance from the parent company, Paytm. These issues prompted a major board overhaul, with former chairman of Central Bank of India, Srinivasan Sridhar, former Bank of Baroda Executive Director Ashok Kumar Garg, and two retired Indian Administrative Service (IAS) officers joining the payments bank’s board.

Paytm’s decision to reconstruct the board with independent and executive directors is seen as an effort to demonstrate compliance with regulatory norms and salvage the situation. While the RBI did not explicitly mandate the board reconstruction, it is speculated that the move aims to reassure the regulatory body about Paytm’s commitment to adhering to norms.

Why Vijay Shekhar Sharma Quit

Mr Sharma owns a 51 per cent stake in Paytm Payments Bank while One 97 Communications, as Paytm was formally known, owns the rest. Mr Sharma said that his resignation from the board and the appointment of independent directors were strategic steps to enable a smooth transition and enhance governance structures. The move is also seen as an attempt to disassociate Paytm from its payments bank unit and position it as an independent entity.

The regulatory challenges faced by Paytm have impacted its stock value, with a significant drop since the RBI’s order. However, the stock has shown signs of recovery, attributed to Paytm’s partnership with new banking entities and the RBI extending the deadline for winding down the payment bank’s operations.

Nirmala Sitharaman’s Action

Finance Minister Nirmala Sitharaman on Monday convened a meeting with representatives from the fintech industry to discuss their concerns and issues. However, the developments at Paytm Payments Bank were not specifically addressed during this meeting, according to two government officials who were present, reports Reuters.

In response to the crisis, the finance ministry has announced plans to hold discussions with Indian law enforcement agencies and fintech firms in the near future. This upcoming meeting aims to facilitate communication between fintech firms and various enforcement agencies, as mentioned in a statement released by the ministry.

The concerns raised by some listed fintech companies regarding their ownership structures will be examined by both the central bank and the government. This move signals a broader effort to enhance transparency and accountability in the fintech sector.

Additionally, the government has pledged to simplify ‘know your customer’ (KYC) norms across the fintech space. Simplifying KYC requirements could streamline onboarding processes for users, potentially addressing some of the operational challenges faced by fintech firms.
 

Paytm said on Monday that Vijay Shekhar Sharma would step down as non-executive chairman and board member of its payments bank’s unit, as the embattled digital payments company overhauls its board after a central bank clampdown.

The action against Paytm Payments Bank followed “serious supervisory concerns”, including inadequate customer identify and a lack of arms-length distance with Paytm, sources had told Reuters.

The Reserve Bank of India has asked the banking unit to wind down its operations by March 15 due to persistent non-compliance and continued material supervisory concerns, triggering a meltdown in Paytm’s stock.

Srinivasan Sridhar, former chairman of state-owned Central Bank of India, former Bank of Baroda Executive Director Ashok Kumar Garg and two retired Indian Administrative Service officers will join the board, Paytm said in an exchange filing.

The new board members’ expertise will be “pivotal in guiding us toward enhancing our governance structures and operational standards, further solidifying our dedication to compliance and best practices”, Paytm Payments Bank CEO Surinder Chawla said.

Paytm supports its banking unit’s move of opting for a board with only independent and executive directors by removing its nominee, it said, adding Sharma was also stepping down from the board to “enable the transition”.

Mr Sharma owns a 51 per cent stake in Paytm Payments Bank, while One 97 Communications, as Paytm is formally known, owns the rest.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)