Paytm’s share price will be in focus on Tuesday after the fintech giant informed that its founder Vijay Shekhar Sharma has resigned from the board of its associate Paytm Payments Bank.
One97 Communications, the parent company of Paytm, on Monday said it has withdrawn its nominee from the Paytm Payments Bank Board and Vijay Shekhar Sharma has stepped down as Part-time non-executive Chairman and Board to enable the restructuring of the board.
Srinivasan Sridhar, former chairman of Central Bank of India, retired IAS officer Debendranath Sarangi, former managing director of Bank of Baroda Ashok Kumar Garg, and retired IAS Rajni Sekhri Sibal have joined the board of Paytm Payments Ban as independent directors.
Read here: Vijay Shekhar Sharma resigns as chairman of Paytm Payments Bank
Additionally, the board has former Punjab & Sind Bank Executive Director Arvind Kumar Jain as Independent Director and Surinder Chawla, MD & CEO at Paytm Payments Bank, the company said in a release.
The Reserve Bank of India (RBI) has imposed major business restrictions on Paytm Payments Bank, restricting it from accepting fresh deposits and making credit transactions after March 15.
The banking regulator has advised the National Payments Corporation of India (NPCI) to examine a request by One 97 Communication to become a Third Party Application Provider (TPAP) for the UPI channel, for the continued operation of the Paytm UPI app.
It has also asked NPCI to facilitate four to five banks, with capacity to process high volumes of UPI payments, to act as service providers to Paytm. If approved, this would allow Paytm to continue processing payments through UPI, but will require a set of newly identified banks to support the app.
This move by RBI led to a rally in Paytm’s share price on Monday. Paytm shares ended at 5% upper circuit at ₹427.95 each on the BSE.
Read here: Paytm’s share price hits a 5% upper circuit as RBI asks NPCI to review third-party app provider’s request.
Global brokerage firm Morgan Stanley sees the above move by RBI as a positive development and believes that NPCI approval would ensure rapid migration of Paytm’s UPI customers, resulting in limited disruption or challenges to its business operations and user engagement in the medium term.
Morgan Stanley said it will also limit the potential impact on Paytm’s non-payment business operations.
According to Goldman Sachs, NPCI’s approval of Paytm to act as a TPAP, would enable it to retain a majority of its MTU base, and therefore continue its ability to monetize such users by cross-selling other products.
Paytm’s share price has plunged nearly 44% in the past month and is down more than 52% in three months. In 2024 so far, Paytm’s share price has fallen more than 32%.
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Published: 27 Feb 2024, 06:34 IST