India’s central bank extended the deadline for some of the business restrictions it’s imposing on Paytm’s Payments Bank to March 15 from February 29, giving the Indian financial services firm an additional 15 days to comply with the rules but squashing chances of any major concessions.
The Reserve Bank of India said Friday that Paytm Payments Bank, an associate firm of the Indian financial services firm that processes the group’s transactions, will be barred from accepting customer deposits, credit transactions and top ups in bank account, prepaid instruments, wallets, FASTags from March 15, 2024.
The update follows the RBI widening its curbs on Paytm’s Payments Bank late last month, an update that has wiped Paytm’s market cap by 55% to $2.6 billion in the 16 days since. Paytm, which serves more than 15 million merchants and 330 million wallet customers, went public in 2021 at a valuation of $20 billion. Its cash balance at December’s closure last year stood at more than $1 billion.
The central bank said in a statement that it was extending the deadline in the “interest of customers (including merchants) of PPBL who may require a little more time to make alternative arrangements and the larger public interest.”
Many other payments bank’s services will be permitted until March 15 instead of the earlier February 29 deadline, the central bank said (PDF). The RBI also published an FAQ (PDF), detailing how the embargo on Paytm’s Payments Bank will impact merchant and customers. In the FAQ, the central bank said merchants using Paytm’s QR code, soundbox and point-of-sale terminal devices will not be impacted by the disruption at Paytm, provided those machines and instruments are linked to other bank accounts.
In its order late last month, the RBI directed Paytm as well as Paytm Payments Bank to terminate their nodal accounts not later than February 29. In the clarification posted Friday, the RBI said it’s maintaining the same deadline for the cancellation of nodal accounts, required by payments firms to facilitate transactions. (Paytm has said this month that it plans to tieup with multiple banks and use their nodal accounts.)
Earlier this week, Macquarie dramatically cut its 12-month price target on Paytm, citing risks of customers leaving the platform in the wake of heightened regulatory scrutiny. Macquarie, which famously predicted the slump at Paytm before the listing, lowered its target to 275 rupees, the most brutal by any major brokerage firm. Shares of Paytm closed trading at 341 Indian rupees, or $4.11, Friday.
Check back for updates as the story develops.
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