‘RBI ban on Paytm Bank’s onboarding of clients to be resolved in 5 months’

NEW DELHI: Digital payments firm Paytm expects that the issue of RBI ban on its subsidiary Paytm Payments Bank to onboard new customers would be resolved in 3-5 months after the clearance by the banking regulator to the processes being put in place.

Paytm group CFO Madhur Deora said the RBI has not given any fixed timeline for the process and the clearance to onboard new customers by Paytm Payments Bank will be given as soon as it is certified.

“Three to five months is the expectation from now (to get RBI clearance). RBI doesn’t say we will finish it in x number of months. There is a process and as soon as they are satisfied, they will give us go ahead for customer acquisition again. Just to be clear, Paytm’s customer acquisition does not stop as a result,” Deora said.

The Reserve Bank of India (RBI) in March had barred Paytm Payments Bank from onboarding new customers, citing “material supervisory concerns” observed at the bank.

The regulator has also directed the bank to appoint an information technology (IT) audit firm to conduct a comprehensive system audit of its IT system.

“All existing customers are not impacted. New users can use UPI, Paytm Postpaid and all the services. What they cannot do is open a brand new relationship with Paytm Payments Bank which is a very small percentage of our business in terms of new users,” Deora said.

He said the company’s business is growing and is on the path to achieving operating breakeven (ie EBITDA before ESOP cost) by September 2023.

Deora said ESOP (employee stock ownership plan) does not have any cost impact on the company but it is a provision that is being made. Paytm MD Vijay Shekhar Sharma in April said shares of Paytm declined significantly in recent times due to volatile market conditions for high growth stocks and his stock grants will be vested to him only when Paytm’s market cap has crossed the IPO level on a sustained basis.