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 chief financial officer Madhur Deora told PTI on Sunday that 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.
“3-5 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 that the company’s business is growing and is on the path to achieving operating breakeven (i.e EBITDA before ESOP cost) by September 2023.
Deora said that ESOP (employee stock ownership plan) does not have any cost impact on the company but it is a provision that is being made. Paytm managing director Vijay Shekhar Sharma in April said that 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.
Paytm has started making provisions for about 2.1 crore shares, to be spread over several quarters, which was one of the main factors that led to the widening of loss for the company in March 2022.
The company on Saturday reported a widening of its consolidated loss to Rs 761.4 crore for the quarter ended March 2022.
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The company had posted a loss of Rs 441.8 crore in the same period a year ago. The losses, however, narrowed on a sequential basis. Its consolidated loss stood at Rs 778.4 crore in the quarter ended December 2021.
The revenue from operations of One97 Communications (OCL), however, jumped by about 89 per cent to Rs 1,540.9 crore during the quarter from Rs 815.3 crore in the year-ago period.
Expenses on employees more than doubled to Rs 863.4 crore from Rs 347.8 crore in the March 2021 quarter.
Deora said that the company’s average number of sales employees almost tripled to 22,249 during the March 2022 quarter from 7,346 in March 2021 quarter which is not going to be the case this year.
“When we have made the statement to achieve operating breakeven by September 2023, it is after considering all the factors,” Deora said.
