The last few days have been in a red for the Fintech giant Paytm. In a bombshell event, the Reserve Bank of India (RBI) on January 31 imposed restrictions on Paytm Payments Bank Ltd following a system audit report and subsequent compliance validation report of external auditors.
The development came an evening before the Interim Budget and created a lot of buzz. On the Budget Day, the Paytm development overshadowed the takeaways or analysis of the Budget and much was talked about the future of the Fintech company.
Paytm founder Vijay Shekhar Sharma came to public via press conference and social media posts multiple times amid these developments, but as he clarifies one update, another negative development follows the suit.
From RBI notification to a much likely ED probe, here are the quick day-by-day updates on the Paytm crisis:
Day1: RBI bars Paytm Payments Bank Ltd
In the evening of December 31, RBI released a notification stating that it has directed Paytm Payments Bank Ltd (PPBL or the bank) to stop onboarding of new customers with immediate effect.
The Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action, RBI said in a statement.
While addressing the media, Vijay Shekhar Sharma, founder of the Paytm, said had said One97 Communications Ltd (OCL) already works with various other banks and Paytm Payments Bank was one of the key banks. From here on the company is clear that it will work with various other banks and not Paytm Payments Bank Ltd (PPBL).
“On behalf of Paytm, this is more of a speed bump, but we believe in partnership of the banks and we will be able to see to the same in the next few days,” he stated.
Also Read: RBI bans Paytm Payment Bank from onboarding customers due to non-compliance issues
Day 2: Founder Sharms bets on partnership with banks
February 1 was the Budget Day and everyone was prepared to discuss the Budget outcomes. But the Paytm ban move hit the financial world harder than the Finance Minister’s Interim Budget.
While addressing the media, Sharma had said One97 Communications Ltd (OCL) already works with various other banks and Paytm Payments Bank was one of the key banks. From here on the company is clear that it will work with various other banks and not Paytm Payments Bank Ltd (PPBL).
“On behalf of Paytm, this is more of a speed bump, but we believe in partnership of the banks and we will be able to see to the same in the next few days,” he stated.
“Many large banks have reached out to us offering support and we are overwhelmed. We will have to change our Virtual Payment Address (VPA) as we partner with other banks. The decision to change partner banks will happen in a few weeks,” Sharma stated.
Day 3: Vijay Shekhar Sharma promises app will keep function even after Feb 29
Vijay Shekhar Sharma promised the app users that it will keep functioning even after February 29.
“To every Paytmer, your favourite app is working, will keep working beyond 29 February as usual,” he said in the X post.
He expressed gratitude and thanked the users for their support and said that the Paytm team will strive towards app compliance as flagged by the RBI.
“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,” he said.
But a significant damage was already doen to the company as the shares of Paytm were locked at 20% lower circuit for the second consecutive day.
Day 4: Jio Financial Services, SBI chief and Enforcement Directorate
A twist in the tale happended when a post of Jio Financial Services surfaced over the social media.
The recent message of the Jio Payments Bank in circulation claims the savings account benefits on-board like easy account opening, and bill payments through its UPI handle.
Jio Payments Bank Limited has commenced operations as a payments bank with effect from April 3, 2018. The Reserve Bank has issued a licence to the bank under Section 22 (1) of the Banking Regulation Act, 1949 to carry on the business of payments bank in India.
Also Read: Amid Paytm crisis, Jio Payments Bank captures social media
Later on, SBI Chairman in an exclusive interaction with ETBFSI on the sidelines of the quarterly results declaration said SBI is reaching out to Paytm customers through its subsidiary SBI payments.
“We will provide all the support to merchants and offer QR scan code, POS machines etc for the industry to not suffer at large,” he said.
Speaking on the blueprint, Khara said, We may not take the stake in the Paytm because we will have to review all the balance sheets and valuation among other aspects.”
Also Read: Paytm crisis: SBI chief Dinesh Khara says will provide all support to merchants
Further, according to Reuters, the Enforcement Directorate (ED) will probe Paytm Payments Bank if any fresh charges of fund siphoning are found.
The Revenue Secretary Sanjay Malhotra told Reuters that if there are any fresh charges of money laundering against Paytm by RBI, those will be investigated by Directorate of Enforcement as per the law of the land.
Also Read: ED to probe Paytm Payments Bank if charges of fund siphoning are found: Report
(Stay tuned with us for more updates on the Paytm crisis)