The last few days have been in the red for the Fintech giant Paytm. In a bombshell incident, 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 by external auditors.
The development took place on the eve of the Interim Budget and created a lot of buzz. On the Budget Day, the development of Paytm overshadowed the takes or analysis of the Budget and talked a lot about the future of the Fintech company.
Paytm founder Vijay Shekhar Sharma has come out several times through press conference and social media posts during these developments, but as he clears one update, another negative development follows suit.
From RBI notification to highly likely ED probe, here are the quick daily updates on the Paytm crisis:
Day 1: RBI bars Paytm Payments Bank Ltd
On the evening of December 31, RBI issued 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 confirmation report by the external auditors revealed persistent non-compliances and ongoing material control concerns in the bank, warranting further supervisory action, RBI said in a statement.
Addressing the media, Vijay Shekhar Sharma, founder of Paytm, said that One97 Communications Ltd (OCL) is already working with various other banks and Paytm Payments Bank is one of the leading banks. From here 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 speed, but we believe in partnership of the banks and we will be able to do the same in the next few days,” he stated.
Read also: 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 Budget Day and everyone was ready to discuss the Budget results. But the Paytm ban has hit the financial world harder than the Finance Minister’s Interim Budget.
Addressing the media, Sharma said that One97 Communications Ltd (OCL) is already working with various other banks and Paytm Payments Bank is one of the leading banks. From here 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 speed, but we believe in partnership of the banks and we will be able to do the same in the next few days,” he stated.
“Many big banks have contacted 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
Also Read: RBI action ‘speed’, in talks with other banks to transfer payments banking business: Vijay Shekhar Sharma
Day 3: Vijay Shekhar Sharma promises that app will work even after 29th February
Vijay Shekhar Sharma has promised the users of the app that it will continue to work even after February 29.
“To every Paytmer, your favorite app is working, will continue to work after 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 work hard to complete application as marked by the RBI.
“I, along with every Paytm team member, salute you for your unwavering support. For every challenge, there is a solution and we are sincerely committed to serving our nation in full compliance,” he said.
But major damage has already been done to the company as Paytm shares were locked at a 20% lower circuit for the second consecutive day.
Day 4: Jio Financial Services, SBI head and Enforcement Directorate
A change in the story happened when a post from Jio Financial Services surfaced over the social media.
The recent message of the Jio Payments Bank in circulation claims that the savings account benefits on board like easy account opening, and bill payments through its UPI handle.
Jio Payments Bank Limited commenced operations as a payments bank with effect from 3 April 2018. The Reserve Bank granted a license to the bank under Section 22 (1) of the Banking Regulation Act, 1949 to carry on the business of a payments bank. in India.
Also Read: Amid Paytm crisis, Jio Payments Bank grabs social media
Later, SBI Chairman in an exclusive interaction with ETBFSI on the sidelines of the quarterly results statement said that SBI is reaching out to Paytm customers through its subsidiary SBI payments.
“We will provide all the support to traders and offer QR scan code, POS machines etc so that the industry does not suffer in general,” he said.
Talking about the plan, Khara said, We may not take the investment in the Paytm as we will have to review all the balance sheets and valuation among other aspects.”
Also Read: Paytm crisis: SBI chief Dinesh Khara says it will provide all support to merchants
Further, according to Reuters, the Enforcement Directorate (ED) will investigate Paytm Payments Bank if any fresh allegations of fund siphoning are found.
Revenue Secretary Sanjay Malhotra told Reuters that if there are new allegations of money laundering against Paytm by RBI, these will be investigated by Enforcement Directorate as per the law of the land.
Also Read: ED to probe Paytm Payments Bank if allegations of fund siphoning found: Report
(Stay tuned with us for more updates on the Paytm crisis)