Vijay Shekhar Sharma, the founder and chief executive officer of Paytm, met Finance Minister Nirmala Sitharaman on February 6 amidst the ongoing crisis involving the company’s banking arm, according to reports citing sources.
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Decline of One97 Communications Stock
The stock of One97 Communications, the payment services firm’s parent arm, has faced a steep decline following major business restrictions imposed by the Reserve Bank of India (RBI) against the Paytm Payments Bank Ltd (PPBL).
Discussions with RBI and Ministry
Sharma and Paytm officials met with the Reserve Bank of India (RBI) on February 5 to discuss regulatory concerns. The meetings come after the RBI instructed Paytm Payments Bank on January 31 to halt accepting new deposits and digital wallet transactions from March due to supervisory concerns and non-compliance with rules.
Seeking Extension and Clarity
The company has requested an extension of the February 29 deadline from the RBI and seeks clarity on the transfer of its license for the wallets business and Fastag service. The RBI reportedly listened to Paytm’s concerns without making any commitments.
Response from Stakeholders
Neither Paytm, RBI, nor the finance ministry immediately responded to Reuters’ request for comment. As of February 5, Paytm’s shares had fallen about 42 percent, wiping $2.5 billion off its market value.
Investigations and Denials
The Enforcement Directorate is reportedly investigating potential violations of foreign exchange rules by platforms operated by Paytm. However, a Paytm spokesperson denied any such violations, labeling the allegations as “unfounded and factually incorrect.”
Regulatory Impact and Market Response
The RBI’s regulatory actions could potentially lead to the cancellation of Paytm’s license, according to a source familiar with the matter. Despite some recovery in its share price on February 6, concerns persist regarding the company’s future amidst ongoing negative news.
Avinash Gorakshakar, head of research at Profitmart Securities, suggested that the recent share price movement could be a “dead-cat bounce” following the significant decline. Bernstein lowered its target share price but maintained an outperform rating, expressing confidence in Paytm’s ability to navigate regulatory challenges and operational changes.