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In a sudden development, the Reserve Bank of India (RBI) dealt a severe blow to Paytm Payments Bank (PPBL) on Wednesday, announcing a suspension of all its core services, including accounts and wallets, effective from March. While this action does not entail the revocation of PPBL's license yet, it does significantly impact the operations of One 97 Communications (the publicly listed Paytm), the parent company of PPBL.
On-ground reports indicate that Paytm's merchants are currently facing intense persuasion from rival payment platforms such as Phonepe and GooglePay, who are offering their services at zero cost. These merchants are concerned about the impending suspension of Paytm's services, and many are already making the switch.
Management has assured that they are actively working to facilitate the seamless transfer of existing Virtual Payment Accounts (VPAs) for merchants to other bank-linked VPAs during this transition period. However, in light of the situation, the financial services business of the bank will be temporarily halted, with the entire operational capacity focused on maintaining essential business operations during this crisis. This is expected to result in a substantial EBITDA loss of Rs. 300-500 Crores.
The RBI's inspection revealed several troubling issues within Paytm Payments Bank, including inoperative Paytm Wallets, instances where a single PAN card was linked to thousands of accounts, lapses in Know Your Customer (KYC) compliance for thousands of accounts, and violations of KYC-anti-money laundering regulations. Moreover, RBI was also uncomfortable with PPBL’s business co-mingling with its promoter group companies (Paytm holds 49% in PPBL whereas promoter Vijay Shekhar Sharma holds the rest 51%). These findings raised serious concerns for PPBL being in the highly regulated banking and payments industry, prompting the regulator to impose stringent restrictions on the bank, effectively grinding its operations to a halt.
Disclosure: MoneyWorks4me's employees may have exposure in the securities mentioned in the above report. For detailed disclosure click here.
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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