Axis, Yes, Canara and Kotak Mahindra Bank among frontrunners to take over PPBL merchants: Report

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Axis Bank, Yes Bank, Canara Bank, and Kotak Mahindra Bank are among the frontrunners to acquire the merchants onboarded by the troubled Paytm Payments Bank Limited (PPBL). It, however, is not clear that one or all of these banks will take over the merchants, Moneycontrol reported citing sources aware of the matter.

Over 3 crore merchants are using Paytm, run by One 97 Communications Ltd. The Reserve Bank of India (RBI), which imposed restrictions on PPBL, allowed One 97 Communication merchants and unified payments interface (UPI) users to continue using their handles, QR codes and point-of-sale (POS) machines after March 15.

As per the report, the banks are looking at expenses worth around Rs 50-70 crore annually to run and process the billions of transactions. The cost is likely to vary on the basis of which banks onboard what kind of merchants and how many transactions are less than Rs 2,000.

“The documentation is happening. Different discussions are happening and each of them is in a different stage and whoever closes the deal will move forward with integration and it could happen this week,” a senior executive was quoted as saying by Moneycontrol.

Last month, Yes Bank managing director and CEO Prashant Kumar said at a press meet that the private sector bank was open to taking over the merchants acquired by PPBL. Kumar said that Yes Bank would have to undertake compliance and due diligence on know your customer (KYC) verification for the acquisition of Paytm Payments Bank’s merchants.

“On average, even if these merchants transact for nearly, Rs 25,000 a day, it is a big opportunity,” Kumar reportedly said at a press meet. Citing the RBI, he further said that risk cannot shifted “from one entity to another.”

He explained that if risks have been identified in compliance or any other risk within Paytm and PPBL because of which the regulatory action has been taken, then the lender needs to make sure that it is not migrated to other entities and instead resolved and taken care of.

Moreover, Axis, Yes and HDFC Banik have partnered with One 97 Communications Limited to run Paytm’s consumer-side UPI business as a third-party application provider (TPAP).

Out of more than 3 crore PPBL merchants, around 20 per cent or nearly Rs 60 lakh use PPBL as their settlement savings account. For the rest of the merchants, One 97 Communications Limited leveraged PPBL to acquire them while providing them QR codes and handles.

These merchants use other commercial bank accounts for settlements, according to the company’s exchange filings.



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