RBI has given 15-day extension to Paytm Payments Bank.
When Reserve Bank of India (RBI) banned Paytm Payments Bank on January 31, it shook the financial markets because the platform has widespread penetration in India. In its order, the RBI asked Paytm Payments Bank - an associate of One 97 Communications - to stop accepting new deposits in its accounts and its digital wallets. But global brokerage firm UBS has said in a research note that Paytm can retain a large part of its customer and merchant base post certain approvals from the National Payments Corporation of India (NPCI).
The RBI has given 15-day extension (till March 15, 2024) for most activities linked to Paytm Payments Bank. It also clarified that customers using @paytm UPI handles can be migrated to banks post approval from NPCI.
The UBS survey said Paytm's cloud and commerce business will be less affected by the regulatory action. The segment is driven by customer engagement in the app and is not directly linked to PPBL. "We model 18 per cent YoY growth in this segment in FY25E," the brokerage firm said.
UBS also expects gradual improvement in Paytm's EBITDA margin, averaging eight per cent from financial year 2024 to 2028.
This comes days after Goldman Sachs, Morgan Stanley and Bernstein expressed a positive outlook for Paytm. Morgan Stanley noted that the regulatory clarification regarding Paytm's UPI operations is "incremental positive".
Meanwhile, Paytm said on Monday that Vijay Shekhar Sharma would step down as non-executive chairman and board member of its payments bank's unit, as the embattled company overhauls its board in the wake of a central bank clampdown.
Also Read | Why Vijay Shekhar Sharma Resigned As Paytm Payments Bank Chairman
Srinivasan Sridhar, former chairman of state-owned Central Bank of India, former Bank of Baroda Executive Director Ashok Kumar Garg and two retired Indian Administrative Service officers will join the board, Paytm said in an exchange filing.
Mr Sharma owns a 51 per cent stake in Paytm Payments Bank, while One 97 Communications, as Paytm is formally known, owns the rest.
On the same day, Finance Minister Nirmala Sitharaman asked the Reserve Bank of India to hold monthly meetings with fintech firms to address their regulatory concerns following Paytm crisis.
She also met representatives from the fintech industry to hear their concerns.