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Tag: Paytm

  • Paytm likely in discussion with Zomato to sell movie ticketing business

    Paytm likely in discussion with Zomato to sell movie ticketing business

    Paytm is in talks with Zomato Ltd. to sell its movie and events ticketing business, according to people familiar with the matter, as the beleaguered fintech company carves a revival strategy amid weakening sales.

    The discussions between Paytm, officially known as One97 Communications Ltd., and online food delivery firm Zomato are in advanced stages, though there are other suitors for the business, the people said, declining to be named as the matter is private. Talks are ongoing and no final decision has been made.

    Paytm, run by founder-CEO Vijay Shekhar Sharma, last month reported its first sales decline on record, and vowed to trim non-core assets. It also warned of job cuts, reflecting the fallout from regulatory action on Paytm Payments Bank Ltd. that’s curtailed much of the fintech’s business and forced it to forge new partnerships with lenders. 

    Paytm does not control the bank but relied on it for digital wallets and payments traffic before the central bank’s move earlier this year.

    Paytm and Zomato did not respond to requests for comment outside of regular business hours.

    Paytm does not disclose standalone numbers for its movie and events ticketing business. It reported annual sales of ₹17.4 billion (₹1,740 crore) ($208 million) in the fiscal year through March 2024 in its marketing services business, which includes movie and events as well as credit card marketing and gift vouchers.

    The sale, if successful, will allow Paytm to sharpen its focus on travel, deals and cash backs – businesses that are important to broaden its merchant base and grow its own sales. 

    The purchase could help Zomato to expand its digital business into a new high-growth area. In 2020, it acquired Uber Technologies Inc.’s India food unit.

    More stories like this are available on bloomberg.com

    ©2024 Bloomberg L.P.

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  • SoftBank likely to exit Paytm this month

    SoftBank likely to exit Paytm this month

    Japan’s SoftBank Group is likely to exit one of its biggest bets in India, Paytm, this month registering investment losses in the range of $150-200 million, sources said.

    The Masayoshi Son-controlled investment firm’s stake in the Indian payments platform has come down to 1.4 per cent at the end of March 2024, as it has been rapidly divesting stake over the last couple of years. Sources said that it will likely exit the company this month, ending a 7-year association.

    SoftBank did not respond to a query sent through its website.

    At the time of Paytm’s IPO in 2021, SoftBank had held 18.5 per cent stake through SVF India Holdings (Cayman) Limited and SVF Panther (Cayman) Limited, which sold its stake in the IPO.

    SVC India Holdings first sold its stake in November 2022, after the expiry of the lock-in period. Between September 2022 and March 2023 its stake in Paytm fell to 12.88 per cent from 17.45 per cent. Thereafter its pace of divestment has been rapid. By June 2023 it had pared its stake to 9.18 per cent, at the end of December 2023 it was at 6.46 per cent and at the beginning of 2024 it had already gone down to around 5 per cent.

    SoftBank’s stake sales in the payments firm have been through a mix of block deals and open market transactions. Between January 23 and February 26 this year, it divested 2.17 per cent through open market sales to bring its stake down to 2.83 per cent.

    Shares of Paytm, a pioneer in the payments space, have been languishing since a regulatory clampdown on its payments bank arm and the stock has fallen nearly 64 per cent from the 52-week high hit in October last year. It slid to a 52-week low of ₹310 last month while the shares have declined 43 per cent in 2024 so far.

    SoftBank funding

    SoftBank first invested in Paytm in May 2017 infusing around $1.4 billion, valuing the company at around $9 billion. It was one of the biggest investments in India then and it came at a time when the Japanese firm had incurred losses of over $1 billion on its investments in Snapdeal and Ola.

    In 2019 SoftBank participated in another funding round where Paytm had raised around $1 billion from a group of investors including China’s Ant Financial Services, valuing the Indian company at $16 billion. SoftBank’s contribution was not revealed.

    Paytm’s IPO had an issue price of ₹2,150, but its debut was at a steep discount and its share price has remained below ₹1,000 most of the time.

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  • UPI transactions moderate from March peak to ₹19.6-lakh crore

    UPI transactions moderate from March peak to ₹19.6-lakh crore

    Mumbai The Unified Payments Interface (UPI) saw both the number and value of transactions moderating by about 1 per cent on month from the record high seen in March 2024.

    Transactions worth ₹19.64 lakh crore were processed during April 2024, 0.7 per cent lower than the record of ₹19.78-lakh crore seen in the previous month. The value of transactions was 40 per cent higher compared with April 2023, as per data by the National Payments Corporation of India (NPCI).

    The end of a financial year traditionally sees a lot of transactions closer to the ₹1 lakh limit as a lot of merchants, business owners and individuals square off transactions leading to higher value and volume of transactions.

    The number of transactions on the UPI network fell 1.0 per cent to 1,330 crore during the month from the March peak level of 1,344 crore transactions. On year, the volume of transactions was 50 per cent higher. On-year growth in UPI transactions consistently remained over 40 per cent for the value of transactions, and above 50 per cent for volume of UPI trades in 2023 and FY24.

    “UPI volumes and value continue to grow on a year-on-year basis, reflecting the continued focus on digital adoption across the country and the customer convenience that UPI offers. The month-on-month reduction is not a comparable factor given that march is usually the month with higher volumes during the year,” said Vivek Iyer, Partner, Grant Thornton Bharat.

    In FY24, the UPI platform processed 13,115 transactions aggregating to ₹199.29-lakh crore compared with 8,376 crore transactions worth ₹139-lakh crore in FY23. In terms of the total transactions processed during the year, the volume of transactions was up 56.6 per cent whereas value of transactions was 43.4 per cent higher.

    UPI transactions are expected to breach 100 crore transactions per day by FY27, as per a report by PwC India, which projects UPI to dominate the retail digital payments landscape, accounting for 90 per cent of total transaction volumes over the next five years.

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  • Paytm users to get all services as before except for PPBL’s wallet, FASTag

    Paytm users to get all services as before except for PPBL’s wallet, FASTag

    Paytm app users will continue to use all services like mobile and DTH recharges except for Paytm Payments Bank’s offerings including wallet funds, FASTag and bank accounts, according to the company hit by RBI restrictions.

    Also read: Three years since launch, has Paytm’s mini app store lived up to expectations?

    Paytm Payments Bank users will not be able to add any funds to their wallet and bank accounts but will be able to use the balance until it is exhausted, according to the RBI order.

    “The RBI has issued a directive restricting Paytm Payments Bank Account/Wallet from accepting new deposits or allowing credit transactions after March 15, 2024. Please note that you will not be able to deposit or add money to your Paytm Payments Bank Account/Wallet after March 15, 2024. However, there is no restriction on withdrawal of money from your existing balance even after March 15, 2024,” Paytm said in frequently asked questions (FAQ).

    The company has said that users can buy HDFC Bank FASTags and also recharge FASTags of other partnered banks on the Paytm app but cannot purchase Paytm Payments Bank FASTags.

    However, the balance left in the Paytm Payments Bank FASTags can be used until it is exhausted.

    “All other services on the Paytm app, including movies, events, travel (metro, flight, train, bus) ticket bookings and more, remain fully operational. Users can continue to recharge their mobile phone, DTH or OTT subscriptions and pay all utility bills (electricity, water, gas, internet) with ease directly through the Paytm app,” the company said.

    Paytm app users can continue to use UPI service as NPCI has approved collaboration of the firm with four banks-SBI, HDFC, YES Bank and Axis Bank.

    Paytm will work as a third-party app (TPAP) and facilitate UPI transactions through the partner bank. It has got five handles in partnership with four banks to continue UPI transactions, as per an update on the NPCI website.

    The company’s existing handle @paytm is among the five handles that users can continue using without the need to make any changes at their end.

    National Payments Corporation of India (NPCI) has approved @paytm and a closed user group UPI handle @ptyes for Paytm in partnership with Yes Bank.

    NPCI has also approved @pthdfc with HDFC bank and @ptsbi with State Bank of India as a partner. However, these two handles are not active immediately.

    A Paytm spokesperson said users can continue to use @paytm handle seamlessly without the need to make any changes at their end.

    The company has suggested merchants to switch from PPBL bank accounts to any other bank in which they want to accept money from customers.

    Also read: Paytm ready for all options for bank’s survival, including acquisition

    “Paytm QR codes, Soundbox and card machines also remain fully operational. This ensures continued convenience for millions of users and merchants who rely on these services for their daily transactions,” the company said.

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  • Administrator likely to be appointed at Paytm Payments Bank after March 15

    Administrator likely to be appointed at Paytm Payments Bank after March 15

    With less than a fortnight to go for Paytm Payments Bank to wind down its operations, highly placed sources in the banking circles say the bank could be the first significant instance in over two decades where the Reserve Bank of India may not hesitate to take a drastic step such as cancellation of its bank license. “If that be the case, an administrator could be appointed at the bank to oversee certain critical aspects,” said a person with knowledge of the matter.

    Failed transactions

    A move of this nature is likely after three–four instances of failed due diligence done on Paytm Payments Bank in a bid to take over its business. Being a deposit-taking entity, it is learnt that a few large banks, including a rival payments bank, are interested in Paytm’s wallet business and have shown interest in taking over Paytm Payments Bank. “However, with reports of inadequate KYC compliance looming over the bank, the interested parties stepped back,” said a banker aware of the matter.

    According to a few more sources, the regulator had sounded off the interested entities acquiring Paytm Payments Bank as they would be at their own risk and no dispensation on the compliance front would be extended to them. “This was a deterrent for any transaction to go through,” said the person quoted above.

    It may be noted that on February 26, the board of Paytm Payments Bank was reconstituted with new members and Vijay Shekar Sharma stepped down as the chairman of the bank. Subsequently, One97 Communications (OCL) terminated all its contracts with the bank. Sharma holds 51 per cent equity in Paytm Payments Bank, while the rest is held by OCL.

    Next steps

    Another banker added that, with the RBI explicitly mentioning in the FAQ dated February 16 that no credits can be made to Paytm Payment Bank’s savings account and no fresh deposits with partner banks through Paytm Payments Bank will be allowed after March 15, 2024, indicates that the bank is unlikely to be in existence for long.

    However, for depositors who may not have withdrawn or closed their accounts with the bank within the slated timelines, their sums will be transferred to ‘unclaimed deposits’ account under the “Depositor Education and Awareness” (DEA) Fund Scheme, 2014. The role of the administrator would be to ensure that any deposit claims made thereafter is satisfactory repaid to the depositors. As of March 31, 2023, Paytm Payments Bank held ₹3,285.27 crore of deposits, with ₹2,955.96 crore of deposits with 1–3 year maturity.

    License revocation likely

    Paytm Payments Bank faced with risk of license revocation after March 15

    Move likely as talks with 3 – 4 large banks for takeover fail

    Inadequate compliance by Paytm Payments Bank seen as reasons for failed takeover talks

    RBI may appoint an administrator to oversee unclaimed deposits after March 15

    Vijay Shekhar Sharma holds 51 per cent stake in Paytm Payments Bank; rest with One97 Communication

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  • Paytm advisory panel discussing terms of reference with company: Damodaran

    Paytm advisory panel discussing terms of reference with company: Damodaran

    An advisory committee, set up by Paytm owner One97 Communications after the Reserve Bank’s action on its payments bank business, is at a stage of engagement with the company on matters related to the terms of reference for the panel, the panel’s head and former chairman of Sebi M Damodaran said.

    “We have been engaging with the group on matters relating to the Advisory Committee’s terms of reference,” Damodaran said on Sunday in response to a query about his engagement with Paytm.

    He said that the panel members are external advisors and at present Paytm is engaged in dealing with the RBI.

    On January 31, the RBI asked PPBL (Paytm Payments Bank Ltd) to stop further deposits, credit transactions, or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, and National Common Mobility Cards, after February 29. Later, the central bank extended the deadline till March 15.

    Paytm on February 9 announced setting up of a group advisory committee headed by Damodaran. The committee was set up to advise the company on strengthening compliance and on regulatory matters.

    Meanwhile, the Reserve Bank on Friday asked the National Payments Corporation of India (NPCI) to examine the possibility of migrating Paytm Payments Bank customers using the UPI handle ‘@paytm’ to 4-5 other banks, in a bid to prevent any disruptions in the payment ecosystem.

    Damodaran was speaking at the release of his biography ‘The Turmeric Latte’ compiled by one of his former colleagues.

    During a panel discussion at the event, when he was asked about his views on the functioning of Sebi at present, Damodaran said the capital markets regulator has bandwidth problems with respect to the large amount of issues that it has to handle.

    “Sebi has a huge challenge. The bandwidth seems inadequate to tackle the large number of issues that they have to tackle. In the process, it sometimes feels like they are biting more than they can chew,” Damodaran said.

    The book, curated by former Tripura cadre IAS officer Dinesh Tyagi who last served as Managing Director of CSC E-Governance, has contributions from former colleagues of Damodaran including former mines secretary Sushil Kumar.

    The book also mentions about “threats” received by Damodaran, when he was the joint secretary in the information and broadcasting ministry, for some decisions taken by him.

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  • India’s central bank extends some Paytm Payments Bank restrictions deadline to March 15 | TechCrunch

    India’s central bank extends some Paytm Payments Bank restrictions deadline to March 15 | TechCrunch

    India’s central bank extended the deadline for some of the business restrictions it’s imposing on Paytm’s Payments Bank to March 15 from February 29, giving the Indian financial services firm an additional 15 days to comply with the rules but squashing chances of any major concessions.

    The Reserve Bank of India said Friday that Paytm Payments Bank, an associate firm of the Indian financial services firm that processes the group’s transactions, will be barred from accepting customer deposits, credit transactions and top ups in bank account, prepaid instruments, wallets, FASTags from March 15, 2024.

    The update follows the RBI widening its curbs on Paytm’s Payments Bank late last month, an update that has wiped Paytm’s market cap by 55% to $2.6 billion in the 16 days since. Paytm, which serves more than 15 million merchants and 330 million wallet customers, went public in 2021 at a valuation of $20 billion. Its cash balance at December’s closure last year stood at more than $1 billion.

    The central bank said in a statement that it was extending the deadline in the “interest of customers (including merchants) of PPBL who may require a little more time to make alternative arrangements and the larger public interest.”

    Many other payments bank’s services will be permitted until March 15 instead of the earlier February 29 deadline, the central bank said (PDF). The RBI also published an FAQ (PDF), detailing how the embargo on Paytm’s Payments Bank will impact merchant and customers. In the FAQ, the central bank said merchants using Paytm’s QR code, soundbox and point-of-sale terminal devices will not be impacted by the disruption at Paytm, provided those machines and instruments are linked to other bank accounts.

    In its order late last month, the RBI directed Paytm as well as Paytm Payments Bank to terminate their nodal accounts not later than February 29. In the clarification posted Friday, the RBI said it’s maintaining the same deadline for the cancellation of nodal accounts, required by payments firms to facilitate transactions. (Paytm said early this month that it plans to tieup with multiple banks and use their nodal accounts.)

    Earlier this week, Macquarie dramatically cut its 12-month price target on Paytm, citing risks of customers leaving the platform in the wake of heightened regulatory scrutiny. Macquarie, which famously predicted the slump at Paytm before the listing, lowered its target to 275 rupees, the most brutal by any major brokerage firm. Shares of Paytm closed trading at 341 Indian rupees, or $4.11, Friday.

    Check back for updates as the story develops.

    Manish Singh

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  • Paytm hits record low after Macquarie downgrade on business viability concerns

    Paytm hits record low after Macquarie downgrade on business viability concerns

    Shares of One 97 Communication, or Paytm, fell 10 per cent on January 13 to a record low, after brokerage firm Macquarie downgraded the entity highlighting concerns regarding its future viability.

    “PayTM faces a serious risk of customer exodus, which significantly jeopardises its monetisation and business model,” said Macquarie in a note. It has increased loss estimates by 170 per cent over FY25 and 40 per cent over FY26, factoring 60-65 per cent decline in revenues due to lower payments and distribution revenues.

    The firm also downgraded the rating on the stock to ‘underperform’, while sharply cutting the target price to ₹275 from ₹650. The stock fell 10 per cent to hit the lower band of ₹380 on the NSE. 

    Paytm has around 33 crore customers, 11 crore monthly transacting users and a subscription network of about 1.1 crore merchants.

    “We assume a 50 per cent cash burn rate and 20x P/E multiple to normalised earnings from the distribution business,” it said, adding that transitioning to new banks will require KYC to be redone, indicating that migration within RBI’s February 29 deadline will be an “arduous task”.

    Paytm has been in discussions with multiple banks to transition its nodal accounts for the wallet, FasTag, NCMC and other business verticals, which are currently backed by Paytm Payments Bank. Several banks such as HDFC and Axis have said they continue to work with Paytm in various aspects, but will await regulatory go-ahead before taking a call on any new business lines or initiatives.

    lending business

    “Lending partners might re-look their relationship with PayTM,” said the note, adding that this could lead to a decline in lending business revenues in case partners scale down or terminate their relationship with PayTM. Aditya Birla Capital, one of Paytm‘s largest lending partners, has already pared down their BNPL exposure to ₹600 crore from a peak level of ₹2,000 crore, and is expected to go down further.

    A year ago, in February 2023, Macquarie had upgraded the rating on Paytm to ‘outperform’ from ‘underperform’, raising the target price from ₹450 to ₹800. According to Axis Burgundy-Hurun list of India’s most valuable private companies, Paytm was the 80th most valuable company with a market value of ₹58,527 crore in 2023, led by 42 per cent gains in its shares over the year.

    However, the recent RBI action, wiped off ₹16,000 crore in value for Paytm in the first two days itself, when it hit the 20 per cent lower circuit on both days. On January 31, 2023, the day of regulatory action, the stock had closed at ₹761 on the NSE.

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  • Macquarie cuts Paytm target on ‘serious risk of exodus of customers’ | TechCrunch

    Macquarie cuts Paytm target on ‘serious risk of exodus of customers’ | TechCrunch


    Macquarie dramatically cut its 12-month price target on One97 Communications, the parent company of digital payments firm Paytm, citing risks of customers leaving the platform in the wake of heightened regulatory scrutiny. Macquarie, which famously predicted the slump at Paytm before the listing, lowered its target to 275 rupees (down 57.7% from its previous target of 650 rupees), the most brutal by any major brokerage firm.

    Paytm, which dropped more than 6% Tuesday morning to 395 rupees ($4.76), is reeling from the Indian central bank’s clampdown. The Reserve Bank of India late last month ordered Paytm to all but shut down operations at Paytm Payments Bank, an associate of Paytm that processes all its transactions.

    The analyst team, led by Suresh Ganpathy, wrote in a note Tuesday that it believes Paytm will see a sharp reduction in revenues and the regulatory crackdown poses a “serious risk of exodus of customers.”

    A price target of 275 rupees would value Paytm at around $2.1 billion, a steep plunge from its peak market capitalization of nearly $20 billion in late 2021. Paytm had $1.072 billion cash balance at the end of December.

    “We cut revenues sharply as we reduce both payments and distribution business revenues (60-65% over FY25/26E). Moving payment bank customers to another bank accounts or moving related merchant accounts to other bank accounts will require KYC (know your customer) to be done again based on our channel checks with partners, indicating that migration within RBI’s Feb 29th deadline will be an arduous task.”

    Macquarie’s 12-month bull and bear price target projections for Paytm.

    Paytm — which makes most of its money through lending — is also likely to face challenges retaining its lending partners, Macquarie added. Paytm doesn’t have the license to operate as a non-banking financial company (NBFC), and acts as a distributor in connecting lending partners with borrowers.

    “Our channel checks with some lending partners reveal that they are re-looking at their relationship with Paytm which eventually could lead to a decline in lending business revenues in case partners scale down or terminate their relationship with Paytm. AB Capital, one of Paytm’s largest lending partners, has already pared down their BNPL exposure to Paytm from a peak level of Rs20bn to Rs6bn currently and is expected to go down further in our view.”

    India’s central bank last week said it takes supervisory actions and imposes business restrictions only after “persistent non-compliance” with rules, its first comment after a clampdown on Paytm last week has posed existential questions about the future of the leading financial services firm.

    Shaktikanta Das, the Reserve Bank of India (RBI) governor, said the central bank always engages with regulated entities bilaterally and nudges them to take corrective action. If the central bank takes actions, “it is always proportionate to the gravity of the situation,” said Das in a media briefing. “All our actions, being a responsible regulator, are in the best interest of systemic stability and protection of depositors’ or customers’ interest,” he added.



    Manish Singh

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  • Banks hesitant to house Paytm nodal accounts

    Banks hesitant to house Paytm nodal accounts


    With less than a month left to migrate nodal accounts of One97 Communications Ltd and Paytm Payments Services Ltd from Paytm Payments Bank, a fresh layer of difficulty seems to have hit One97 Communications, which houses the Paytm brand and its group entities. According to sources, several allegations of regulatory non-compliances have surfaced against Paytm and its group entities in the recent days causing banks to turn cautious about housing Paytm’s nodal accounts.

    Opening a fresh nodal account with a bank would require the customer to comply with KYC or know your customer norms. In case of Paytm which is a corporate entity, banks would also run tests on whether any anti-money laundering (AML) related issues have surfaced in the entity as part of KYC checks. Even though none of the allegations pertaining to AML are under investigation or these charges have been proven, mere suspicion of AML non-compliance is adequate for banks to reject an entity’s application for opening new accounting citing KYC deficiencies.

    Paytm spokesperson denied the same. “Over the last two years, Paytm has been working with multiple third-party leading banks. We are expanding these relationships, and they are progressing positively,” the spokesperson replied to an e-mail sent seeking comments.

    Room for suspicion

    However, bankers say that once there is room for suspicion, banks may wait for a final outcome or clarification to come through from the investigation agencies to proceed with company and /or its group entities.

    “KYC-related issues are very serious aspects for banks to take into account, especially when it is a high-profile case. Non-compliance of KYC attracts monetary penalties from the RBI and there is a lot of regulatory investigation around it as well,” said a senior banker of a large bank.

    A nodal account is a special internal bank account similar to a current account which is opened for businesses that are intermediaries and involves connecting customers and vendors. For banks, nodal accounts is a meaty source of float income and hence banks are forthcoming in opening these accounts in most cases. “However, in Paytm’s case, the cost of doing business may exceed the advantages under the current circumstances,” said a top official of a private bank.

    On February 1, Vijay Shekar Sharma, founder of One97 Communications, told analysts that the company is working with various banks and Paytm Payments Bank was one of the key banks. “From here on, we are clear that we will work with various other banks and not Paytm Payments Bank,” he said on the analyst call.

    Why nodal acc is important

    Nodal account is a special bank account similar to current account

    It is opened for businesses which intermediate and involve connecting customers and vendors

    For banks, nodal accounts are a meaty source of float income

    AML-related allegations against Paytm and its group entities force banks to turn cautious to house Paytm nodal accounts

    Banks fear being questioned by RBI for KYC deficiency in this case





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  • India’s Paytm is in flux | TechCrunch

    India’s Paytm is in flux | TechCrunch


    Shares of Paytm plunged 10% on Monday, the third consecutive session of declines, touching an all-time low of 438.35 Indian rupees (or $5.28) after the RBI’s clampdown last week looks to have had a more extensive impact than previously anticipated.

    The trading was halted after Paytm’s shares fell 10%, the artificial limit put on its daily trade by the local exchanges. Even as Paytm initially anticipated RBI’s decision to have a maximum annual impact of $60 million to its business, the financial services firm has shed about $2.5 billion in its market cap in three days, or more than 40% of its value since Wednesday close. (Paytm’s market cap on Monday stood at $3.35 billion, below the $3.4 billion valuation at which it raised capital from Ant Financial in 2015 and far below its IPO valuation of $20 billion. More on numbers here.)

    The Reserve Bank of India (RBI) last week widened its curbs on Paytm’s Payments Bank, which processes transactions for Paytm, barring it from offering many banking services, including accepting fresh deposits and credit transactions across its services. In response, Paytm initially said it will terminate business with its affiliate and seek partnership with other banks.

    However, uncoupling Paytm from its affiliated Paytm Payments Bank appears to engender additional difficulties, both technical and perceptual.

    Shares of ubiquitous financial services firm Paytm, which went public in 2021. (Images, data: Yahoo Finance)

    TechCrunch first reported last week that the RBI is considering canceling Paytm’s Payments Bank license. In early 2018, when Paytm received the Payments Bank license – which allows the holder to offer customers a savings account of up to $2,400 – it had to surrender its PPI license, the permit required to operate the wallet business.

    Paytm Payments Bank houses more than 330 million wallet customers and Paytm cannot transition them to a different banking partner until the central bank returns the firm its PPI license. And it’s unclear if the central bank – which has been uncharacteristically strong-worded in its penalty order on Paytm – will make any concessions by the deadline (February 29). Indian daily Hindu Businessline reported on Sunday that Paytm is trying to sell the wallet business.

    And that is not the only other license at stake. As Bengaluru-based fintech investor Osborne Saldanha adds:

    The obvious, direct impact is that Paytm’s payment banking operations will be halted until RBI releases further instructions. It is however unclear if RBI will allow Paytm to ever resume payment banking operations even post compliance with RBI’s requirements as the notification does state any remedial clauses. It’s entirely possible that RBI may cancel Paytm’s payment banking license altogether. If that happens, bear with me as I’m not able to conclusively decipher, but it seems Paytm might not even have a payment aggregator license, as the payment aggregator license would have resided in the payment bank license and Paytm’s application for a payment aggregator license was returned by RBI.

    In its notification last week. the RBI said Paytm’s “persistent” noncompliance with an earlier order — from March 2022, when the RBI ordered Paytm to stop adding customers to Payments Bank — raised supervisory concerns and warranted further actions. The RBI said an audit found the instances of noncompliances, but didn’t go into details.

    The local media reported last week that Paytm Payments Bank was riddled with issues such as money-laundering and that India’s crime-fighting agency Enforcement Directorate was probing the firm. Paytm declined (PDF) that the ED was conducting any investigation, and in a townhall with employees on Saturday, Paytm’s senior executives assured that the issues reported in media were “old” and had been fixed “long back,” TechCrunch first reported.

    As we attempt to understand the full extent of the potential damage from the RBI’s initial ruling to Paytm, the company is already beginning to bleed customers and merchants. As Macquarie analyst Suresh Ganapathy pointed out on an analyst call last week, many Paytm customers are already harbouring the belief that Paytm is defunct.

    The ongoing episode with Paytm is also shaking the confidence of investors in the Indian fintech market. The RBI has introduced a series of regulatory changes — or clarifications —  in the last three years and fintech as a sector was already becoming hostile for many VCs.

    “I believe this action against Paytm is precedent-setting, harsh and impacts the broader financial services ecosystem in India. I don’t remember the last time RBI canceled the license of a bank for reasons other than adequate capital requirements,” Saldanha added.

    Bipin Singh, co-founder of financial services firm MobiKwik, defended the RBI’s rationale: “Having worked with the regulator closely over the last decade or so, I can say conclusively that RBI is neither against innovation nor against fintechs. If they were, we wouldn’t have the huge fintech ecosystem in India today. Compliance, however, is not negotiable,” he tweeted.





    Manish Singh

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  • No investigation by ED: Paytm

    No investigation by ED: Paytm


    One97 Communications, the parent company of Paytm, on Sunday clarified that there has been no investigation by the Enforcement Directorate on the company, its associates and/or its founder and CEO for anti-money laundering activities.

    “Neither the company nor its founder and CEO are being investigated by the Enforcement Directorate regarding inter alia money laundering. In the past, certain merchants/users on our platforms have been subject to enquiries and on those occasions, we have always cooperated with the authorities. During any such investigations by the authorities on any set of merchants/users in the past, we have cooperated with them on these investigations. This has been previously disclosed to the stock exchanges,” One97 said in a stock exchange filing.

    “We would like to set the record straight and deny any involvement in anti-money laundering activities. We have and continue to abide by Indian laws and take regulatory orders with utmost seriousness,” it added.

    The clarification comes amid media reports that claimed that the recent action by the RBI was linked to investigations by the ED.





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  • Domestic Investors Raise Shareholding in Paytm in Q3

    Domestic Investors Raise Shareholding in Paytm in Q3

    Domestic investors including mutual funds and retail shareholders have significantly upped their shareholding in fintech major Paytm in the just ended third quarter this fiscal, latest shareholding data with stock exchanges showed. 

    Mutual Funds have increased their stake by 2.20 per centto 4.99 per centin Q3FY24 from 2.79 per centin Q2FY24, led by investment from Mirae Mutual Fund and Nippon India Mutual Fund. As a result domestic institutional investors witnessed an increase in stake by 2 per cent to 6.06 per centfrom 4.06 per cent.

    The increase in interest is also seen in the massive jump of retail shareholding. On Retail investors’ shareholding has gone up up significantly by more than 4 per centto 12.85 per centfrom 8.28 per centsequentially while Non Resident Indians (NRIs) also saw an increase to 0.67 per centfrom 0.49 per cent.

    Meanwhile, in the foreign portfolio investors’ (FPIs) category, the shareholding is at 18 per centand FPI Category II saw a marginal decline 0.45 per centsequentially. 

    In the FDI category, the shareholding by SVF India Holdings (Cayman) stands at 6.46 per centfrom 8.34 per cent while BH International Holdings sold its 2.46 per centstake.

    Global and domestic brokerage firms CLSA, Jefferies, Bernstein, Axis Capital and Motilal Oswal Financial Services see Paytmposting a healthy growth in total revenue, and contribution margin, strong GMV growth, and improvement in adjusted EBITDA in the third quarter of FY24. The company is yet to announce third quarter results. 

    In the second quarter, the fintech giant’s revenues grew 32 per centyear-on-year (YoY) to ₹2,519 Crore led by higher subscription revenue, payments business revenue and growth in loan disbursals. Additionally, its contribution profit jumped 69 per cent YoY to ₹1,426 Crore with contribution margin up at 57 per centfrom 44 per centlast year.

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  • Paytm plans over ₹100 crore investment in GIFT City

    Paytm plans over ₹100 crore investment in GIFT City

    Paytm is planning to invest over ₹100 crore to set up a global payment development centre at GIFT City in Gujarat, Vijay Shekhar Sharma, founder and CEO of the company, said on Saturday.

    “We are going to build a global payment development centre in GIFT City. We believe there is an opportunity to expand on global payments from here,” said Sharma who was in Gandhinagar to attend the “Infinity Forum 2.0” event organised by GIFT City and International Financial Services Authority (IFSCA).

    Also read: RBI directive impact: Paytm recalibrates loan distribution biz strategy

    “We have set aside a large amount of investment. We are in talks. I can only say that given a choice we will be investing upward of ₹100 crore in GIFT City in a year,” he told media persons at the sidelines of the event. “By Vibrant Gujarat 2024 (to be held on January 10-12, 2024), we will come out with a formal commitment,” Sharma added.

    The Paytm founder said that there are huge opportunities in GIFT City where services can be offered on a global scale.

    “We are really excited about GIFT City’s plans to be a hub of fintech. We are going to come back to Gujarat with a serious investment plan,” Sharma said.

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  • India's Paytm curbing low-value personal loans spells bad news for the industry | TechCrunch

    India's Paytm curbing low-value personal loans spells bad news for the industry | TechCrunch

    Indian financial services firm Paytm sent shockwaves through the industry on Wednesday after it disclosed that it plans to issue fewer personal loans under 50,000 Indian rupees ($600) in a move that has already started to rattle many fintech investors.

    Paytm’s move followed the RBI recently tightening norms for consumer loans and publicly expressing concerns about the bad, tiny personal loans. Paytm said Wednesday that it was getting “ultra conservative” and will expand its portfolio of higher-ticket personal and commercial loans to lower-risk and high credit-worthy customers.

    On an analyst call Wednesday, Paytm president and chief operating officer said “recent macro development and regulatory guidance” as well as dialogue with lending partners prompted the firm’s move.

    “We believe this reflects growing conservatism in the system as well as Paytm’s large share in the segments,” Jefferies analysts said. Goldman Sachs lowered its estimates of Paytm’s revenue and adjusted EBITDA for FY24 through FY26 by up to c.10%/40%, on sharply lower lending estimates, and said it expects FY25 disbursal growth of 0% YoY vs 37% earlier.

    Industry executives said the move impacts the growth momentum and return on equity profile for unsecured lending for the entire sector and smaller players might be disproportionately impacted.

    “For about 77% of Paytm’s revenue base which includes payments, commerce & cloud, we see no change in outlook, with these segments growing revenues at mid-to-high-teens percentage over the next 2-3 years. However, for the lending segment, we now forecast overall disbursals in 2HFY24 to be 11% lower vs 1H, with FY25 disbursals growing at 0% YoY (vs 37% estimate earlier),” Goldman Sachs analysts wrote Thursday.

    “Lending has been a key driver of Paytm’s improving profitability, and we see low growth visibility in this vertical over the next 6-12 months given the higher-than-expected pressure on small-ticketing lending that Paytm is seeing. While Paytm has guided for 40-50% decline in postpaid disbursals in the near term, the range of outcomes remains wide in our view, with potential for further pressure if the macro environment does not see a meaningful improvement.”

    Manish Singh

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  • RBI directive impact: Paytm recalibrates loan distribution biz strategy

    RBI directive impact: Paytm recalibrates loan distribution biz strategy

    One97 Communications Limited (OCL), which owns Paytm, on Wednesday, said that it is consciously pruning its loan disbursals below ₹50,000. At the same time, this fintech major has decided to expand its credit distribution business so as to enhance focus on higher ticket loans for consumers and merchants.

    This comes days after the Reserve Bank of India (RBI) increased the risk weights — the capital that banks need to set aside for every loan disbursed — for banks and NBFCs by 25-125 per cent on retail loans.

    “On the back of recent macro development and regulatory guidance, in consultation with lending partners, in line with its continued focus on driving a healthy portfolio, the company has recalibrated the portfolio origination of less than ₹50,000, which is prominently the postpaid loan product and will now be a smaller part of its loan distribution business going forward”, Paytm said in a statement, alluding to RBI’s recent directive.

    Merchant loans, which are given to MSME as business loans, will continue to be a focus for Paytm. As these loans are given for business purposes to small merchants, they don’t get impacted by the recent regulatory guidance.

    A Paytm spokesperson said, “As the lending distribution business is maturing, we see newer opportunities of expansion to offer high-value personal and merchant loans. We will continue to focus on originating the high portfolio quality for our lending partners, along with strict adherence to risk and compliance. We have seen great scale and acceptance for our loan distribution business, so we believe this expansion will further aid us to grow the business.”

     Paytm continues to add banks and NBFCs as its lending partners for its loan distribution business. 

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  • Fiserv rewards points now on Amazon | Bank Automation News

    Fiserv rewards points now on Amazon | Bank Automation News

    E-commerce giant Amazon and global payments provider Fiserv have teamed up to offer reward points for Amazon web and mobile app shoppers last month.  The program allows Amazon customers to link debit and credit cards from 200 financial institutions to their Amazon accounts to collect and redeem points on Amazon, according to Fiserv. More financial […]

    Vaidik Trivedi

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  • 25% of new credit card issues happen on RuPay network: NPCI Rai

    25% of new credit card issues happen on RuPay network: NPCI Rai

    About 25 per cent of all new credit card issuances are happening on the RuPay network, according to Praveena Rai, COO, NPCI (National Payments Corporation of India).

    “Cards in force are growing fast, driven by the innovative product suite. Volume growth is multiplying; it’s more than doubling,” Rai said on the sidelines of the launch of the SBI Paytm credit card on the RuPay network.

    Even though 52 per cent of customers on the UPI network are credit active, only 3–10 per cent use credit cards. The NPCI said that of the over 30 crore UPI users, 2.5–3.0 crore are credit card holders.

    Huge opportunity

    This provides NPCI with a huge opportunity to grow its credit card portfolio and market share now that the RuPay network has been integrated with UPI, Rai said, adding “there are a number of programmes already launched on RuPay and there are many in the pipeline,” including more tie-ups for co-branded cards.

    NPCI’s RuPay has a 35 per cent market share in the debit card market in terms of volume, 30 per cent in terms of the value of card spends, and 69 per cent in terms of cards in force. The thrust on credit cards began about 3–4 years ago with a focus on technology and innovation, local market requirements, product differentiation, and building brand value.

    “We told ourselves that unless we are building the stature of RuPay on the credit side, we can’t lay claim to the fact that RuPay is India’s indigenous card network, and for that, we really changed gears on credit,” Rai said at the event.

    The credit card portfolio has seen a spike since the linking of the RuPay network to UPI, she said, adding that this card will “emerge as a keystone credit solution” as it offers the convenience of acceptance of credit cards across all UPI points with card benefits such as rewards and cashbacks.

    “What NPCI has done phenomenally well with UPI and QR is incredible. RuPay credit card riding is the game changer here,” said Nalin Bansal, Chief of Corporate and Fintech Relationships and Key Initiatives at NPCI.

    The SBI Paytm card, originally launched in November 2020, will be issued instantaneously and will not require tokenisation at merchant touch points as the UPI ID will become the de facto token.

    Under the RuPay launch, it will offer benefits up to ₹75,000 with a complimentary Paytm First and OTT platform membership, flight ticket discounts, rewards, savings, and cash backs.

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  • Paytm’s loan disbursements grow by 148% in April; number of loans disbursed rises by 56% YoY

    Paytm’s loan disbursements grow by 148% in April; number of loans disbursed rises by 56% YoY

    One97 Communications, which owns the Paytm brand, said that its loan disbursements grew 148 per cent in April 2023 at ₹4,115 crore (₹1,657 crore).

    However, the latest loan disbursal amount was lower than the March 2023 disbursement level of ₹4,468 crore. 

    The number of loans disbursed for the month under review grew 56 per cent year-on-year to 4.1 million, the same level as the previous month.

    “Our loan distribution business (in partnership with our lender partners) continues to witness healthy growth with total loans distributed through our platform for April 2023 growing 148 per cent year-on-year to ₹4,115 crore ($ 503 million)”, Paytm said in its operating performance update filed with the stock exchanges on Saturday.

    “We continue to see growth in distribution of Postpaid and Personal Loans. In Merchant Loans, the demand continues to be robust, however due to a comprehensive technology systems upgrade by one of our lending partners, we had to temporarily pause merchant loan distribution through our platform for that partner”, Paytm update said.

    While new loan distribution was largely unaffected given that the company has multiple partners, Paytm said upselling to existing merchants of that partner got impacted. 

    “The system upgrade in now done and our partner has resumed disbursing merchant loans. While we continue to work with all our partners to service the robust demand of merchant loans, we believe, some impact of April could be felt in Q1 FY 2024 merchant loan growth”, Paytm said.

    Paytm, which has partnered with large NBFCs and Banks, said it continues to focus on the quality of loans distributed through its platform. 

    “We currently have 7 lending partners and we aim to onboard 3-4 partners in FY 2024”, it added.

    GROSS MERCHANDISE VALUE 

    The total merchant Gross Merchandise Value (GMV) processed through the Paytm platform for April 2023 stood at ₹1.27 lakh crore, reflecting a year-on-year growth of 34 per cent. 

    The GMV (cumulative for the quarter) for the quarter ended March 2023 stood at ₹3.62 lakh crore, up 40% over ₹2.59 lakh crore in the same quarter in 2021-22. 

    “Our focus over the past few quarters continues to be on payment volumes that generate profitability for us, either through net payments margin or from direct upsell potential”, Paytm said.

    Paytm sees continued expansion of consumer engagement on the Paytm Super App with average monthly transacting users (MTU) for April 2023 growing 25 per cent year-on-year to 9.2 crore (7.4 crore).

    Also the average MTU for the quarter ended March 2023 stood at 9 crore, up 27 per cent over the 7.1 crore in March 2022 quarter.

    The number of merchants paying subscription for payment devices has reached 7.1 million, an increase of 3 lakh in the month of April 2023.

    “With our subscription as a service model, the strong adoption of devices drives subscription revenues and higher payment volumes, while increasing the funnel for our merchant loan distribution”, Paytm said in its latest operating performance update. 

    It maybe recalled that Paytm reported operating profitability in the December 2022 quarter, three quarters ahead of its earlier guidance of achieving this target by the September 2023 quarter.

    On Friday, Paytm reported a significantly narrower net loss of ₹168 crore for the fourth quarter ended March 31, 2023 as compared to net loss of ₹ 761 crore in same quarter last year.

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  • RBI returns PA applications of Paytm, Freecharge, PayU

    RBI returns PA applications of Paytm, Freecharge, PayU

    The Reserve Bank of India (RBI) has returned the applications of prominent online non-bank Payment Aggregators (PAs) such as Freecharge Payment Technologies, PayTM Payments Services, and PayU Payments for authorisation under the Payment and Settlement Systems Act, 2007 (PSS Act). 

    The central bank also returned the application of Tapits Technologies. However, these four PAs have been allowed to apply afresh within 120 days from the date of return.

    Thus, the aforementioned PAs, whose applications were returned in the last two months or so, can continue business subject to the condition that no new merchants should be on-boarded until advised otherwise, according to Reserve Bank of India’s update on the status of Applications of Online PAs received under the PSS Act.

    PAs are entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations without the need for merchants to create a separate payment integration system of their own.

    PAs facilitate merchants to connect with acquirers. In the process, they receive payments from customers, pool and transfer them on to the merchants after a time period.

    Status of existing PAs

    Amazon (Pay) India, Computer Age Management Services, Google India Digital Services, Infibeam Avenues, NSDL Database Management, NTT DATA Payment Services, Pine Labs, Razorpay Software, Reliance Payment Solutions and Zomato Payments are among the 32 existing PAs which have been granted ‘In-Principle Authorisation,’ allowing them to operate as online PAs.

    The applications of 18 other existing PAs including Instamojo Technologies, PhonePe, and Unimoni Enterprise Solutions are under process.

    Status of new PAs

    The RBI has granted ‘In-Principle Authorisation’ to 19 new PAs, including Hitachi Payment Services, Juspay Technologies, Mswipe Technologies, Tata Payments and Zoho Payment Technologies. But they cannot operate yet.

    The applications of 9 new PAs, including Aurionpro Payment Solutions, SBI Payment Services, and Sodexo SVC India are under process.

    Third list

    RBI said the applications of 17 existing PAs were returned. These PAs have been advised to stop online payment aggregation activity and close nodal / escrow account(s) within a period of 180 days from the date of return of application.

    Indian Railway Catering and Tourism Corporation, Khatabook Technologies, and Ola Financial Services are among the 40 new PAs whose application has been returned, as per the third list.

    RBI, in a statement, advised all stakeholders to transact with only those existing PAs who have been granted in-principle authorisation or whose application is currently under process.

    Stakeholders may transact with new PAs only after these entities have received ‘authorisation’ under Section 7 of the PSS Act from the central bank, per the statement.

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