‘We give sufficient time to every entity to comply and sometimes more than sufficient time to the entities for compliance. If they would comply, why would a regulator like us would have to take action?’ RBI governor Shaktikanta Das said in the briefing after the monetary policy committee address.
‘RBI will be issuing a set of FAQs (frequently asked questions) next week to assuage public concerns following the Paytm action,’ Das said.
Paytm CEO Vijay Shekhar Sharma meets with FM Nirmala Sitharaman, RBI, stock goes up
According to reports, the RBI had refused to grant concessions to the payment gateway.
Paytm parent company One97 Communication’s stock rose nine per cent, in positive developments for investors, a day after the troubled fintech firm’s founder Vijay Shekhar Sharma met the Reserve Bank of India and finance minister Nirmala Sitharaman.
The Paytm stock was trading at INR 492.45, up by 9.05 per cent in early trade at 9:43 am. The shares had opened at INR 461.30, more than the previous day’s close of INR 451.60.
The rise comes a day after the central bank refused to grant any concessions to the fintech firm in connection with its crackdown on the company’s Payments Bank Business. The company has been refused by the RBI on extending the February 29 deadline, which means that Paytm now needs to migrate the Payments Bank accounts to third party banks before then to ensure that the payments interface functions smoothly.
While some analysts think this rise in value a knee-jerk reactions before the stock plummets, others are optimistic that while the regulatory action may likely to impact investors’ assessment of the business model risk and of the management’s ability to handle regulatory risk, the company will mange to successfully execute the operational changes required to overcome the restrictions imposed by the central bank.
Paytm was told by the government that the action against his company was a regulatory process, so any government intervention seems unlikely for now.
Jio Financial denies reports of acquisition of Paytm’s wallet business
Mukesh Ambani-led financial services provider Jio Financial Services issued a statement to the exchanges on Monday night to clarify on news reports which stated the company is in talks to acquire Paytm’s wallet business.
Jio Financial Services and HDFC Bank were touted to be frontrunners to acquire Paytm’s wallet business, according to media reports.
RBI is concerned that some of the accounts could have been used for money laundering, with India’s Revenue Secretary Sanjay Malhotra saying on Saturday to Reuters that the financial crime fighting agency would probe Paytm Payments Bank, if any fresh charges of fund siphoning are found.
Paytm denied the allegations of money laundering, pointing out the company and its Paytm Payments Bank business have never been probed by the Enforcement Directorate.
Paytm stock recovers after it plunges another 10% on RBI crackdown, firm loses 43% market value
Shares of Paytm on the other hand have had three consecutive lower circuits, two of 20% each and one of 10% on Monday, taking the cumulative three-day drop to 42%.
The stock closed at its previous all-time low of INR 438.5 on Monday.
The company lost about $2.5 billion or about 43% of its market value since the Reserve Bank of India (RBI)’s crackdown.
It also led to a 20% drop in the stock, its daily maximum at that time, on Thursday and Friday.
India’s stock exchanges have cut Paytm’s daily trading limit to 10% from 20%, after the stock crashed on Thursday and Friday.
The stock gained 5 percent on February 6, trading at INR 466.
The article has been updated.