Paytm Share Surge: Is the Hard Time Over for Paytm?

On Wednesday, Paytm witnessed a remarkable surge in its shares, soaring up to 10 per cent following reports of CEO Vijay Shekhar Sharma's discussions with Finance Minister Nirmala Sitharaman and the Reserve Bank of India (RBI) regarding regulatory concerns.

Seeking Clarity and Compliance: The Path Forward for Paytm

At 9:31 am, shares of One97 Communications, the parent company of Paytm, surged to Rs 496.75 apiece on the BSE, marking a significant increase compared to the previous close. However, this surge comes amidst lingering regulatory challenges faced by the digital payments giant, notably the RBI's directive to halt new deposits in its accounts and digital wallets.

Despite the recent uptick in share prices, Paytm's stock still lags behind its pre-January 31 levels, reflecting investor concerns regarding regulatory compliance and operational stability. Amidst talks of addressing these concerns with regulatory authorities, Paytm has actively sought an extension of deadlines and clarity on key operational aspects from the RBI.

It is to note that while regulatory compliance remains a focal point, investor confidence has been bolstered by the CEO's engagement with regulators. However, challenges persist, particularly regarding the operational crisis and the company's strategy moving forward.

Moreover, analysts emphasize the significance of Paytm's payment operations, highlighting the potential inconvenience to customers and merchants in the event of a sudden shutdown of payments bank operations. 

Vijay Shehkhar Sharma Meets FinMin

According to government sources, Mr. Sharma's meeting with Ms. Sitharaman lasted for 10 minutes, during which he was informed that the government has no role to play in the matter. Paytm has been instructed to address the issue directly with the RBI and ensure compliance with their guidelines, the sources added.

Furthermore, sources indicated that Mr. Sharma also held discussions with RBI officials yesterday regarding the regulatory concerns.

Paytm Controversy

Last Wednesday (January 31), the RBI imposed restrictions on Paytm Payments Bank Ltd, prohibiting the acceptance of deposits or credit transactions, including top-ups, in customer accounts or associated prepaid instruments such as wallets and FASTags, effective from February 29. However, customers will retain access to their account balances without any limitations, as stated in the RBI directive.

Additionally, the RBI has terminated the nodal accounts of Paytm's parent company, One97 Communications Ltd, and Paytm Payments Bank Ltd.

Assuring customers of the safety of their funds, Paytm Payments Bank has stated that although deposit services will be discontinued after February 29, the app will continue to function normally. Mr. Sharma reiterated this commitment to uninterrupted service.

To know more about what is going on with Paytm, watch the video below: