Paytm Payments Bank Ltd (PPBL) has run into a dispute with its auditor JC Bhalla & Co over the certification of its accounts for the fiscal year 2024, the Economic Times reported. Given the regulatory restrictions that have brought its business to a near standstill, the auditor has raised concerns about the bank's viability. These remarks are related to whether the company remains a 'going concern' or not, according to sources familiar with the matter.
PPBL has strongly opposed the auditor's suggested qualifications, arguing that the Paytm brand’s strength will support a revival plan and that there will be an infusion of capital to facilitate this. PPBL, which is 49 percent owned by listed One97 Communications and 51 percent held by founder-promoter Vijay Shekhar Sharma, is concerned that such qualifications could hinder its plan to obtain a payment aggregator licence for Paytm Payments Services Ltd.
Sources close to the development indicated that efforts are ongoing to persuade the auditors to accept a management representation or a legal opinion affirming the business's viability. Senior management of One97 Communications is seeking intervention from the Reserve Bank of India (RBI). However, it is unlikely the central bank will step in until the annual report is filed, as the matter stands between the management and the auditor.
Also read: Paytm shares under pressure, block trades for up to 1.1 percent of equity
“The RBI has not indicated to PPBL that it would be allowed to resume operations, such as mobilising deposits and onboarding new customers, nor has it set conditions like completing KYC of accounts to restore permissions,” said one of the sources. “In fact, the opportunity to rectify compliance matters has passed, and now it is directed to wind down operations and transfer all businesses to One97 Communications.”
The central bank banned PPBL from accepting new deposits starting March 15 due to the bank's failure to comply with know-your-customer (KYC) guidelines, which require face-to-face verification and the collection of officially valid documents. Since then, PPBL’s net worth has eroded, and it has generated no income, with no immediate prospects of recovery.
Moneycontrol could not very this news independently.
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