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Tag: Vijay Shekhar Sharma

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

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

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    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    However, for depositors who may not have withdrawn or closed their accounts with the bank within the slated timelines, their sums will be transferred to ‘unclaimed deposits’ account under the “Depositor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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  • India’s Paytm is in flux | TechCrunch

    India’s Paytm is in flux | TechCrunch

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    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.



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    Manish Singh

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  • Paytm’s lending business hits annualised run rate of Rs 34,000 cr; 9.2 mn loans disbursed in Q2

    Paytm’s lending business hits annualised run rate of Rs 34,000 cr; 9.2 mn loans disbursed in Q2

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    Despite incurring quarterly losses, fintech major Paytm continued to see steady growth in its lending business in the September quarter this fiscal. The platform disbursed 9.2 million loans worth Rs 7,313 crore in Q2, recording a 224 per cent year-on-year growth, Paytm said in its earnings statement.

    “[Our] loan distribution business has scaled up significantly over the last 12 months, seeing increased adoption by users. We exited Q2 FY23 with disbursements in our loan distribution business at an annualised run-rate (ARR) of about Rs 34,000 crore,” Paytm shared.

    The value of personal loans jumped 736 per cent to Rs 2,055 crore since last September (Q2 FY22). More than 40 per cent of the disbursements were made to existing Paytm Postpaid [the Buy-Now-Pay-Later product] users. The average ticket size (ATS) of personal loans stood at Rs 110,000, while ATS for merchant loans was at Rs 150,000 in Q2 FY23.

    Total merchant loans disbursed amounted to Rs 1,208 crore, a YoY growth of 342 per cent. “Repeat loans continue to see a healthy take up with 50 per cent of merchants having taken a loan more than once. More than 85 per cent of value disbursed this quarter was to merchants with a deployed Paytm payment device,” the company said in exchange filings.

    Meanwhile, Paytm Postpaid, which powers purchases at checkouts with instant credit, disbursed loans worth Rs 4,050 crore, growing at 449 per cent. This was driven by increasing user adoption and rising offline-online merchant acceptance, with the network reaching 15 million at the end of Q2 FY23. Paytm Postpaid’s signed-up user base has now crossed 6 million. “Postpaid continues to show significant cross-sell opportunities in personal loans and credit cards,” according to the company.

    Even though Paytm’s lending business has grown consistently, the Vijay Shekhar Sharma-led company reckons it is still an under-penetrated market, with more headroom for growth and at high profit margins.

    Paytm Postpaid penetration stands at 4 per cent of average Monthly Transacting Users (MTU); personal loans penetration is at a mere 0.6 per cent of average MTU; and merchant loans penetration is at 4.4 per cent of total devices deployed by Paytm. “Our penetration level for each product remains low, and gives us a long growth runway ahead,” the company said.

    Overall, Paytm’s revenue in the ‘Financial Services and Others’ business was Rs 349 crore, up 293 per cent YoY, and now accounts for 18 per cent of the company’s total revenues. This is “driven by sourcing and collection revenues in our loan distribution business”, the company revealed.

    It added, “Our collections efforts continue to deliver good performance, with indicative portfolio performance across loan products holding up well. We continue to seek growth and upsell opportunities as low penetration supports future growth potential, while working with our lending partners to maintain healthy credit quality.”

    Also read: Nykaa, Paytm, Policy Bazaar: Lock-in periods of 10 IPOs to expire in November

    Also read: Paytm Q2 losses narrow sequentially to Rs 571 crore

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  • ‘Bought this phone just to use 5G’: Vijay Shekhar Sharma complains to Airtel, Google over 5G services

    ‘Bought this phone just to use 5G’: Vijay Shekhar Sharma complains to Airtel, Google over 5G services

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    Indian digital payments and financial services company Paytm’s CEO Vijay Shekhar Sharma, on Sunday, said that he was unable to use 5G in the national capital New Delhi, despite buying a new 5G phone.

    Sharma also said that he bought a new Google smartphone ‘Pixel 6a’ only to use 5G services rolled out by internet-provided Airtel but that did not help.

    Sharma, in a tweet, said, “Hello @Airtel_Presence, even the Google Pixel 6a is not showing 5G network option in Delhi. All upgrades done and I bought this phone just to use 5G!” He also tagged Airtel Cares, the telco’s customer support handle.

    Paytm CEO also attached a screenshot in his tweet, which shows that the 5G network was not displayed as the preferred network type.

    Moreover, in another tweet, Sharma explained that this was because of Google, the smartphone manufacturer that is yet to release a software update for 5G support.

    Sharma, tagging Google in another tweet, said, “Ouch! Hello @GoogleIndia do you think India should get 5G handset software upgrade soon? @GooglePixel_US”

    Paytm CEO’s tweet went viral across the social platform, with other people joining in and raising the same issue.

    Another Twitter user Mudit Mathur replied to Paytm CEO’s tweet, and said “The update will come only in December!” He also attached a cropped image of a conversation with Google support that reads “Our current target is to release 5G as part of our December feature drop.”

    Airtel launched its 5G internet services on October 6 and became the first telecom operator to officially roll out 5G services in India. It has launched Airtel 5G Plus service for 8 cities – Delhi, Mumbai, Chennai, Bengaluru, Hyderabad, Siliguri, Nagpur and Varanasi. The company also claims that its users won’t need to change their SIM card as the existing one will now be 5G-enabled.

    On the other hand, Reliance Jio is rolling out 5G service in four cities including – Delhi, Kolkata, Mumbai and Varanasi. Reliance Jio has also launched the Jio 5G Welcome Offer under which eligible users get unlimited 5G data and 1gbps data speed free of cost until the company announces 5G plans in India.

    Here’s how to check if your phone has 5G connectivity or not:

    1. Go to the settings app on your phone
    2. Click on the ‘Wi-Fi & Network’ option
    3. Go to the ‘SIM & Network’ option
    4. A list of all technologies will appear under the ‘Preferred network type’ option
    5. If your phone supports 5G, it will be listed with other services like 2G/3G/4G/5G.

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