The directives issued by the Reserve Bank of India (RBI) will only impact the Paytm Payments Bank operations, not the Paytm’s application, the company’s founder Vijay Shekhar Sharma wrote on X.
Amid RBI’s crackdown against Paytm Payments Bank, many customers have expressed concern about whether the QR payments app would work or not after February 29. Addressing these concerns, Paytm founder Vijay Shekhar Sharma assured that the app will continue to work even if Paytm Payments Bank shuts down.
“To every Paytmer, Your favourite app is working, will keep working beyond 29 February as usual. I, with every Paytm team member, salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance. India will keep winning global accolades in payment innovation and inclusion in financial services – with PaytmKaro as the biggest champion of it,” he said.
Madhur Deora, President and Group CFO at Paytm, also issued a clarification on the same earlier, saying that Paytm and Paytm Payments Bank cannot be treated as a single entity and have no impact on each other.
“There may be this impression that Paytm and Paytm Payment Bank is one, but by design and by structure, it is not and it cannot be. First it is an associate company and second is not an associate company in the sense that is some Bank. And first and foremost for a bank is that, it has to follow the governance that a bank is supposed to follow, which is to say that has to has its independent management team, which reports to the board and the matters that have to go to committees of the board where can only be independent directors,” Deora said earlier.
The board of the payment company also said in its exchange filings that its associate bank Paytm Payments Bank is run independently by its management and board.
RBI’s directive against Paytm Payment Bank
RBI is currently considering cancelling the operating licensee of Paytm’s associate bank Paytm Payments Bank once the money of the depositors is safeguarded. It is likely that the same can be done by the banking regulator by February 29.
After February 29, Paytm Payments Bank will bar customers from replenishing their savings accounts or the popular digital payment wallet. However, RBI has not issued a final decision regarding the matter yet.
RBI issued a directive against Paytm Payments Bank for violations including misuse of customer documentation rules and non-disclosure of material transactions. According to the RBI, thousands of Paytm bank users have not yet submitted their KYC documents, raising money laundering concerns.
(With inputs from PTI)