Banking regulator Reserve Bank of India (RBI) has barred new online merchants from joining the platform through Paytm Payments Services. Paytm has given this information in the regulatory filing. Although the company said that this ban of RBI will not affect its business.
One-97 Communication Limited (OCL), which operates the Paytm brand, applied in December 2020 to transfer all the services related to the payment aggregator to the Paytm payment service to comply with the RBI's payment aggregator (PA) guidelines. Which was rejected by the banking regulator RBI. After this, the company applied again in September 2021 after submitting all the necessary documents.
Paytm said that in the letter received from RBI, it has been said that in order to comply with the FDI rules, necessary permission will have to be obtained from the company for several previous downward investments in Paytm payment service and till then the company will allow new online merchants on its platform.
As per the PA guidelines of RBI, a single entity cannot provide e-commerce marketplace with payment aggregator service. In such a situation, the company which provides both these will have to separate its payment aggregator services from the e-commerce marketplace.
On behalf of Paytm, on this decision of the banking regulator, it was said that the company can apply again within 120 days regarding 'payment aggregator'. Until RBI approval is received, the company will not add new online merchants.
The company further said that the RBI ban will not affect the business of the company and will not affect the income. We will continue to add offline merchants to the platform. Along with this, the business of Paytm payment service will also continue with the existing online merchants.
