3 min readNew DelhiUpdated: Feb 7, 2024 07:35 AM IST
Paytm founder and CEO Vijay Shekhar Sharma met Finance Minister Nirmala Sitharaman on Tuesday and had also met Reserve Bank of India (RBI) officials, days after the regulator imposed a ban on Paytm Payments Bank (PPBL).
“It was a short meeting of about 10 minutes in the evening with the Finance Minister. He (Sharma) explained his position. He was asked to reach out to the RBI for resolving the issue,” a person aware of the meeting said.
On January 31, the RBI barred Paytm Payments Bank from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, FASTags and NCMC card after February 29, 2024, in the wake of persistent non-compliances and material supervisory concerns.
The crackdown on PPBL came after a comprehensive system audit report and subsequent compliance validation report of the external auditors, the RBI had said. The RBI had directed that the Nodal Accounts of One97 Communications Ltd (OCL), which owns Paytm, and Paytm Payments Services Ltd are to be terminated at the earliest, in any case not later than February 29, 2024.
Sharma, who is a part-time Chairman of the bank, met RBI officials and sought some relaxations on the regulatory action on PPBL, sources said.
A mail sent to One97 Communications did not elicit any response.
Paytm stock continues its fall (File Image)
Paytm Payments Bank has been facing RBI scrutiny since 2018. The RBI’s recent action on PPBL came after it was found that the bank had violated KYC norms and also had linked the same PAN to multiple customers. It was also observed that the bank was allowing transactions above the permissible limit, which raised concerns over money laundering.
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In June 2018, RBI had made certain observations about the processes the company followed to acquire new users, especially on KYC norms. Paytm Payments Bank then stopped enrolling new customers following an audit by the RBI, which revealed that the firm was not following adequate KYC norms when it comes to acquiring new customers.
In a conference call on February 1, Sharma described the RBI action on PPBL as more of a big speed bump and the bank would be able to see through in the next few days or quarters.
He also indicated that OCL will stop its dependency on PPBL and its nodal accounts and QR codes will be moved to other banks.
Meanwhile, shares of OCL which declined by 43 per cent in the last three sessions, recovered by 3 per cent to Rs 451.60 on the BSE on Tuesday.
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OCL also denied speculation that Jio Financial of the RIL group is in talks to acquire Paytm Payments Bank’s wallet business. Stating that this acquisition talks are speculative, baseless and factually incorrect, Paytm said, “we have not been in any negotiations in this regard. We have been informed by Paytm Payments Bank, our associate company, that they also have not been in any negotiations in this regard.”
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