With the Reserve Bank of India barring its subsidiary Paytm Payments Bank from accepting new deposits from February 29, what’s in store for the embattled fintech firm?
It was a forgettable day for the Vijay Shekhar Sharma-led payments platform as its shares tumbled by 20 per cent on opening, day after the RBI’s second big crackdown on its subsidiary in two years.
According to a Reuters report, Paytm CEO Vijay Shekhar Sharma said on an analyst call that the bank regulator’s action is a ‘speed bump’ and the fintech firm is working to develop partnerships with banks other than Paytm Payments Bank following the regulatory order.
Such partnerships with banks will not be difficult to execute, Sharma was quoted as saying.
“The Indian Startup Dream must overcome every situation collectively. Here, for good,” Moneycontrol quoted Sharma as saying.
The company expects a worst-case impact of 3 billion rupees ($36 million) to 5 billion rupees to its annual earnings before interest, tax, depreciation and amortisation (EBITDA), the report added.
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The central bank’s curbs have raised concerns that Paytm’s lending partners might reconsider their relationships with the company, which owns 49% of the payments bank, analysts said, and could stall efforts by Paytm to attain profitability on a net basis.
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Paytm: From bill payment platform to fintech
Paytm was founded in 2010 by Sharma as a pre-paid mobile and television bill payment platform. Later, the company expanded its services to facilitating online instant payments through the Unified Payments Interface (UPI), with the payments business since becoming its largest source of revenue.
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However, Paytm shot to fame when the Narendra Modi government banned high-denomination notes in 2016.
In November 2021, Paytm decided to go public and launched the largest ever IPO at ₹18,300 crore. However, the IPO launch turned out to be one of the worst stock market debuts India had seen to that point, raising questions about its lack of profit and its lofty valuation. The stock trades currently about two-thirds below its listing price.