Paytm delinked from its payment bank: Here's what it means
The board of directors at Paytm has approved the decision to discontinue inter-company agreements with Paytm Payments Bank Limited (PPBL). The move is expected to raise investors' confidence as PPBL faces ire of the Reserve Bank of India (RBI) over regulatory non-compliance issues. Paytm has formed new partnerships with other banks and implemented measures to ensure uninterrupted services for customers and merchants. Meanwhile, services like Paytm app, Paytm QR, Paytm soundbox, and Paytm Card machines will continue to operate smoothly.
Axis Bank partnership for merchant payment settlements
On February 16, Paytm joined forces with Axis Bank for merchant payment settlements. The company moved its nodal account to Axis Bank through an escrow account opened with the bank. One97 Communications stated that this change would guarantee seamless merchant settlements as before. The RBI also assured PPBL customers that they wouldn't be affected by the central bank's actions and allowed customer withdrawals up to available balances.
Application for TPAP status with NPCI
One97 Communications (which owns Paytm), HDFC Bank, and Yes Bank jointly applied to become a third-party application provider (TPAP) with the National Payments Corporation of India (NPCI) on February 22. This move aims to operate the mobile payments platform Unified Payments Interface (UPI). NPCI is expected to fast-track the process, ensuring that customers can use the Paytm app for UPI payments without any issues. Once approved, Paytm will function as a TPAP, similar to competitors like PhonePe and Google Pay.
Vijay Shekhar Sharma's resignation from PPBL
In addition to Paytm discontinuing its agreement with PPBL, Vijay Shekhar Sharma earlier resigned as its part-time non-executive chairperson on February 26. This move was perceived as an effort to dissociate Paytm from the tainted PPBL. PPBL is presently banned from taking deposits, providing loans, or performing top-ups on customer accounts, wallets, and FASTags. At the time of writing, Paytm stocks traded at Rs. 418.20 apiece, which is 3.69% higher than yesterday.
