Regulatory constraints led Paytm Payments Bank to stop new deposits from March 1. CEO Vijay Shekhar Sharma discussed potential wallet and FASTag transfers with RBI amidst concerns. Despite a 42.4% stock decline, One97 Communications’ parent company gained. Paytm denied Foreign Exchange Management Act violations, while Jio Financial Services and HDFC Bank, previously linked to Paytm, denied acquisition talks (Paytm CEO consults with RBI).
Paytm CEO Vijay Shekhar Sharma recently engaged in discussions with the Reserve Bank of India (RBI) to address regulatory concerns and seek clarity on the potential transfer of the company’s wallet business and FASTag electronic toll collection system, according to two sources on Tuesday.
These talks come in the wake of regulatory restrictions imposed on Paytm’s banking affiliate by the RBI, instructing Paytm Payments Bank to halt the acceptance of new deposits in its accounts and digital wallets from March 1 (Paytm CEO consults with RBI). The regulatory action was taken citing supervisory concerns and non-compliance with established rules.
“The biggest question currently is whether Paytm Payments Bank can transfer its wallets and FASTags. The company has not received an answer on it yet. If there’s clarity on the same, the company will be able to mitigate things faster,” stated a source.
As of March 1, the Reserve Bank of India (RBI) has prohibited Paytm Payments Bank from accepting additional deposits, conducting credit transactions, or facilitating top-ups in customer accounts, prepaid instruments, wallets, FASTags, and National Common Mobility Card cards (Paytm CEO consults with RBI). According to the company’s website, Paytm Payments Bank manages over 300 million wallets and 30 million bank accounts.
It has issued more than eight million FASTag units and processed over 57.91 million FASTag transactions in terms of volume in December 2023, as per data from the National Payments Corporation of India. Paytm did not respond to Business Standard’s email seeking comments.
Despite a three-day decline, shares of One97 Communications, the parent company, saw gains, closing at Rs 452.8, a 3.3% increase from the previous day’s closing. The NSE reported shares worth Rs 2,775 crore were traded (Paytm CEO consults with RBI).
In the past three trading sessions, the digital payments major witnessed a substantial 42.4% decline in its shares, resulting in a market cap reduction exceeding Rs 20,000 crore.
Earlier, One97 Communications dismissed reports suggesting talks with Jio Financial Services for the acquisition of Paytm Payments Bank’s wallet business. On Monday, Jio Financial Services also officially denied any discussions with Paytm (Paytm CEO consults with RBI). Media reports indicated that Jio Financial Services and HDFC Bank were frontrunners in acquiring Paytm’s wallet business.
This week, Paytm refuted reports of an investigation or violation of foreign exchange rules by the company or its affiliate, Paytm Payments Bank. Reports quoting sources claimed that the Enforcement Directorate was probing potential violations of the Foreign Exchange Management Act by platforms under One97 Communications.
