SUMMARY
Calling the report a speculation, a source at Paytm said the company is not in any talks to sell its wallet business
Earlier, the report said that Paytm is in exploratory talks with Jio Financial Services and HDFC Bank to sell its wallet business
Following the report, shares of Jio Financial Services surged as much as 16.5% during the intraday trading on the BSE on Monday
Hours after a report said that Paytm is in exploratory talks with a few companies, including Jio Financial Services, to sell its wallet business, the fintech giant rejected the report.
Calling the report a speculation, a source at Paytm said the company is not in any talks to sell its wallet business.
Meanwhile, a Paytm Payments Bank spokesperson said, “We do not comment on any market speculation. We completely abide by the direction of the regulator, and the team’s effort is to ensure a smooth customer experience with the products offered by PPBL.”
Earlier, Hindu BusinessLine, citing sources, reported that Jio Financial Services and HDFC Bank are the leading contenders to acquire the wallet business of Paytm after the Reserve Bank of India’s (RBI’s) regulatory crackdown on its payments bank.
Following the report, shares of Jio Financial Services surged as much as 16.5% during the intraday trading on the BSE on Monday (February 5). However, shares of HDFC Bank did not witness any significant movement.
As per the media report, seven senior fintech and banking sector executives with knowledge of the development said that Paytm has been in talks with Jio Financial Services since November last year for a deal.
“With KYC related issues compounding for Paytm, they’ve not been as aggressive with the business as they were prior to 2022 in the wallets business and if valuations on the table were decent, the talks would with Jio would have fructified much earlier,” a source was quoted as saying.
However, after the RBI’s latest action, the fintech major might sell the business to ensure continuity for Paytm’s existing wallet users.
“You could call it a distress sale. In such a situation, valuation is the last thing that Paytm can hold on to,” a fintech expert was quoted as saying.
The report also said that Paytm has also reached out to HDFC Bank for a deal.
A source reportedly informed Hindu BusinessLine that given there is a reasonable overlap between HDFC Bank customers and Paytm wallet users and many customers of the former continue to use Paytm wallet over Payzapp, a deal with Paytm could address this issue for the bank.
It is pertinent to note that last week, the RBI barred Paytm Payments Bank from taking any deposits or credit transactions or top-ups in any of its customer accounts. The central bank also stopped Paytm Payments Bank from providing any other banking services, such as UPI facility and fund transfers after February 29, 2024.
While Paytm has issued multiple statements following that and said it’s working with the RBI to comply with the regulatory requirements, the entire fiasco has left many merchants and other customers of Paytm anxious.
Amid this, the Confederation of All India Traders (CAIT) has advised all the businesses and traders to switch from Paytm to other payment platforms for business-related transactions.
Amid heavy selling in the stock, the BSE and the NSE lowered Paytm’s circuit limits to 10% from 20% earlier. On Monday, the company’s shares opened 10% lower at INR 438.35 and were locked in the lower circuit limit.
