Paytm sees up to ₹500 crore hit on its annual operating income post RBI restrictions

"Paytm Payments Bank is taking immediate steps to comply with RBI directions, including working with the regulator to address their concerns as quickly as possible," the statement said.

The RBI directives does not impact user deposits in their savings accounts, wallets, FASTags, and NCMC accounts, where the existing balances can be used.

One97 will henceforth work with other banks and not with Paytm Payments Bank and that the next phase of its journey is to continue to expand its payments and financial services business, "only in partnerships with other banks."

The Paytm Payment Gateway business will continue to offer payment solutions to its existing merchants. Offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Pautm Card Machine, will continue as usual, where it can onboard new offline merchants as well.

One97 and Paytm Payments Services will move the nodal to other banks during this period.

One97 will pursue partnerships with other banks to offer various payments services to its customers.

Other businesses like loan distribution, insurance distribution and equity broking are unaffected by this decision.

The company has also clarified that founder Vijay Shekhar Sharma has not taken any margin loans, or pledged any shares directly or indirectly owned by him.

"While OCL is allowed to have two board seats on the board of Paytm Payments Bank, as a part of the shareholder agreement, it exerts no influence on its operations other than a minority board member and a minority shareholder," it further said.

The Reserve Bank of India on Wednesday had directed Paytm Payments Bank to stop deposits or credit transactions or top-ups in any customer account, prepaid instruments, wallets, FASTags, NCMC cards, etc after February 29, 2024, other than any interest, cashback, or refunds which may be credited anytime.

"We think revenue & profitability implications in the medium to long term could be significant & remain a key item to monitor. We have seen RBI take 15 months time to revoke its ban on digital business activities of the largest private sector bank. However, in this case since the first ban (in March 2022) for onboarding new customers (22 months have lapsed), RBI has conducted a comprehensive IT audit and continued to identify non-compliance, which in our view indicates that these lapses are quite material," brokerage firm Macquarie wrote in its note.

Shares of Paytm are still 65% below their IPO price of ₹2,150.