Paytm writes off Rs 227 crore investment in Payments Bank

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Paytm has written off Rs 227.1 crore worth of investment in its associate entity, Paytm Payments Bank Limited (PPBL), and accounted for it as impairment losses, which affected its financials.

"The value of the Company’s investment in PPBL is impaired and, accordingly, has recorded an impairment provision of Rs 227 crore, representing the carrying value of its investment in PPBL and disclosed the same as Impairment of investment in associate," it financial statement mentions.

The company, which holds 49 percent in PPBL, said there is an "ongoing uncertainty" associated with the business operations of PPBL since the restrictions on January 31, 2024, which led to the decision.

"The business of PPBL has been significantly impacted by the RBI action. As of date, the audited financial statements of PPBL are not available and, accordingly, the company has accounted for its share of losses and OCI of PPBL, based on unaudited financial information of PPBL as at and for the year ended March 31, 2024," it said.

The central bank, on January 31, 2024, had asked PPBL to stop offering banking services effective March 2024, citing concerns with respect to breach of and non-compliance with regulatory guidelines.

Pursuant to the RBI’s actions, Paytm had terminated its nodal accounts maintained with PPBL, and subsequently discontinued all major business activities it had with PPBL.

Paytm on May 22 reported net loss of Rs 550 crore in Q4FY24, a 3.2X jump, as its margins took a hit post RBI’s crippling ban on PPBL on January 31.

The revenue from operations was down by 2.9 percent year on year (YoY) at Rs 2,267.10 crore, against Rs 2,334 crore in the same period last year.

"The Profit after tax (PAT) was impacted due the impairment of Rs 227 crore towards the carrying value of company’s investment in PPBL. Excluding this, profit after tax would have been Rs 323 crore," it said.