Paytm Payments Bank will work as usual after February 29: Founder Vijay Shekhar Sharma

Two days after the Reserve Bank of India (RBI) issued an order stating Paytm Payments Bank Limited (PPBL) will not be able to offer credit services or take any deposits from March 1, Paytm's founder Vijay Shekhar Sharma on Friday reassured users that the application will be "working and keep working beyond February 29 as usual".

With more than 300 million users, Paytm is constantly battling issues since March 2022 when the RBI first warned the former to stop onboarding new customers citing "persistent non-compliance of services" that was raised by an external audit.

In a post on social media platform X, Sharma thanked Paytm users and wrote, "To every Paytmer... I with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance. India will keep winning global accolades in payment innovation and inclusion in financial services - with PaytmKaro as the biggest champion of it."

Aligning with the RBI's directions, PPBL has assured that its existing customers need not worry about their money and can continue to use their account balances, including savings and current— "without restriction to available limit".

Last month, RBI barred Paytm Payments Bank from accepting deposits or top-ups in any customer account, prepaid instruments, wallets, and FASTags, among others after February 29, 2024. As an immediate precautionary step, PPBL recently issued a statement notifying RBI directions under section 35A of the Banking Regulation Act, 1949 and clarified that it is "complying with the RBI directions and working to address their concerns as quickly as possible".

Below is a screengrab of the statement:

Screengrab of the statement issued by Paytm over RBI directions.

Following the RBI order to halt business at PPBL, Paytm shares tumbled 20 per cent in pre-open trade on Thursday. Paytm's stock fell to a six-week low of Rs 609 from Rs 761.4 on Wednesday erasing $1.2 billion in market value. On Friday morning Paytm's stock fell further to Rs 487.2.

Sharma holds 51 per cent stake in PPBL, a separate but connected business of Paytm, which holds a 49 per cent stake in its banking unit.