Paytm Chief Govt Vijay Shekhar Sharma met the Indian central financial institution on Monday to debate plans to handle regulatory issues, two sources with direct information of the talks mentioned on Tuesday, days after the regulator imposed curbs on its banking affiliate.
The Reserve Financial institution of India (RBI) informed Paytm Funds Financial institution final Wednesday to cease accepting new deposits in its accounts and its widespread digital wallets from March, citing supervisory issues and non-compliance with guidelines.
“Discussions are on about addressing RBI’s regulatory issues, and the corporate has sought an extension of the February 29 deadline,” mentioned one of many sources.
Paytm has additionally been looking for readability from the RBI concerning the switch of its licence for the wallets enterprise and digital freeway toll cost service Fastag, the supply mentioned.
“The RBI heard Paytm out with out making any commitments,” a second supply mentioned.
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 issues in regards to the affect on the broader enterprise, as Paytm Funds Financial institution powers most options of the digital funds app, which competes with the likes of Walmart’s PhonePe and Google.
The RBI’s regulatory clampdown may be a precursor to Paytm’s licence being cancelled, a supply accustomed to the matter mentioned final week.
The inventory hit a file 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 international change guidelines.
A Paytm spokesperson denied any violations of international change legislation, 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 larger at Rs. 465.
Avinash Gorakshakar, head of analysis at Profitmart Securities, mentioned the share transfer might be a “dead-cat bounce” after the latest rout, pointing to the quantity of destructive information nonetheless overhanging the inventory.
Bernstein lowered its goal share value to Rs. 600 from Rs. 950, however retained an outperform score.
“Whereas the regulatory motion will little question have a long-lasting affect on traders’ evaluation of the enterprise mannequin danger and of the administration’s capacity to deal with regulatory danger, we count on the corporate to efficiently execute the operational adjustments required to beat the restrictions,” Bernstein analysts mentioned.
© Thomson Reuters 2024
