Paytm crisis: Vijay Shekhar Sharma tries to buy more time from FM, RBI

Paytm founder Vijay Shekhar Sharma, in his closed-door meetings with RBI and Finance Minister Nirmala Sitharaman, reportedly sought an extension in the deadline set for Paytm Payments Bank, citing merchant and retail customer interests.

Sharma requested the RBI and Sitharaman to push the February 29 time by a month, a Businessline report claimed.
In his 10-minute-long meeting with the finance minister, Sharma was told to sort the matter directly with the RBI since it was a "regulatory issue".

The central bank is expected to issue some clarification in the Paytm case, considering its user base and reach. Financial services secretary Vivek Joshi hinted at the move, adding that the RBI had taken the present step in the interest of consumer protection.

The regulator has asked Paytm Payments Bank to settle all pipeline transactions and nodal accounts by March 15, 2024.

RBI may reportedly consider either cancelling the licence of Paytm Payments Bank or superseding its board after the settlement of all pipeline transactions and nodal accounts. RBI has already issued directions to Paytm PB under Section 35A of the Banking Regulation Act, 1949.

Paytm has more than 3 crore merchants on its platform, of which around 20 percent, or around 60 lakh, use PPBL as their settlement account. Also, for most of the UPI addresses on the Paytm app, the sponsor bank – technically called payment service provider (PSP bank) -- is PPBL.

Paytm is expected to migrate all these accounts to third-party banks before February 29 for the UPI payments to work seamlessly. UPI accounts for more than 90 percent of the gross merchandise value on Paytm.