Paytm Chief Executive Vijay Shekhar Sharma met the Indian central financial institution on Monday to focus on plans to tackle regulatory considerations, two sources with direct data of the talks stated on Tuesday, days after the regulator imposed curbs on its banking affiliate.
The Reserve Bank of India (RBI) informed Paytm Payments Bank final Wednesday to cease accepting new deposits in its accounts and its common digital wallets from March, citing supervisory considerations and non-compliance with guidelines.
“Discussions are on about addressing RBI’s regulatory concerns, and the company has sought an extension of the February 29 deadline,” stated one of many sources.
Paytm has additionally been in search of readability from the RBI relating to the switch of its licence for the wallets enterprise and digital freeway toll cost service Fastag, the supply stated.
“The RBI heard Paytm out without making any commitments,” a second supply stated.
Paytm and the RBI didn’t instantly reply to Reuters’ request for remark.
As of Monday, Paytm’s shares had fallen about 42 p.c, wiping $2.5 billion (roughly Rs. 20,762 crore) off its market worth on considerations concerning the affect on the broader enterprise, as Paytm Payments Bank powers most options of the digital funds app, which competes with the likes of Walmart’s PhonePe and Google.
The RBI’s regulatory clampdown is also a precursor to Paytm’s licence being cancelled, a supply conversant in the matter stated final week.
The inventory hit a report low early on Tuesday following a Reuters report that India’s federal anti-fraud company was investigating if platforms run by the corporate have been concerned in violations of overseas trade guidelines.
A Paytm spokesperson denied any violations of overseas trade regulation, calling the allegations “unfounded and factually incorrect”.
Its shares later reversed losses, rising as a lot as 8 p.c on the day and final buying and selling 6 p.c greater at Rs. 465.
Avinash Gorakshakar, head of analysis at Profitmart Securities, stated the share transfer could possibly be a “dead-cat bounce” after the current rout, pointing to the quantity of damaging information nonetheless overhanging the inventory.
Bernstein lowered its goal share worth to Rs. 600 from Rs. 950, however retained an outperform score.
“While the regulatory action will no doubt have a lasting impact on investors’ assessment of the business model risk and of the management’s ability to handle regulatory risk, we expect the company to successfully execute the operational changes required to overcome the restrictions,” Bernstein analysts stated.
© Thomson Reuters 2024
