Paytm CEO Vijay Shekhar Sharma said he would discuss regulatory concerns with the RBI.

Paytm Chief Executive Vijay Shekhar Sharma met with India’s central bank on Monday to discuss plans to address regulatory concerns, two sources with direct knowledge of the talks said on Tuesday, after the regulator imposed sanctions on its banking affiliate. A few days after

Reserve Bank of India (RBI) last Wednesday asked Paytm Payments Bank to stop accepting new deposits into its accounts and its popular digital wallet from March, citing surveillance concerns and non-compliance with regulations.

“Discussions are on to address RBI’s regulatory concerns, and the company has requested an extension to the February 29 deadline,” a source said.

Paytm has also sought clarification from the RBI on the transfer of its license for wallets business and digital highway toll payment service Fastag, the source said.

Another source said, “RBI listened to Paytm without any commitment.

Paytm and RBI did not immediately respond to Reuters’ request for comment.

As of Monday, Paytm shares had fallen nearly 42 percent, wiping $2.5 billion (about Rs 20,762 crore) off its market value on fears of an impact on the broader business, as Paytm Payments Bank digital payments app Powers most of the features. Competes with the likes of Walmart’s PhonePe. Google.

RBI’s regulatory ban could also be a prelude to the cancellation of Paytm’s license, a source familiar with the matter said last week.

The stock hit a record low early on Tuesday after a Reuters report said India’s federal anti-fraud agency was investigating whether platforms operated by the company violated foreign exchange rules. are involved in the violation of

A Paytm spokesperson denied any violation of foreign exchange laws, calling the allegations “baseless and factually incorrect”.

Its shares later reversed the losses, rising as much as 8 percent on the day and last trading up 6 percent at Rs. 465.

Avinash Gorakshakar, head of research at ProfitMart Securities, said the share’s move could be a “dead-cat bounce” after the recent rout, pointing to the amount of negative news still weighing on the stock. .

Bernstein has set his target share price at Rs. 600 to Rs 950, but retained the better performance rating.

“While the regulatory action will undoubtedly have a lasting impact on investors’ business model risk and ability to manage management risk, we expect the company to successfully implement the operational changes required to overcome the sanctions.” ” said the Bernstein analyst.

© Thomson Reuters 2024

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