Paytm Payments Bank: All options, including acquisition, on table to keep lender afloat

With the outlook for Paytm Payments Bank looking bleak, One 97 Communications is reportedly is open to acquisition to keep its lending arm running. 

At stake is Paytm Wallet, with nearly 330 million customers, and FASTag, in which Paytm is the market leader.

A Hindu Businessline report claims if there is even a slight chance of its survival via acquisition, the fintech is ready to take it. Business Today could not independently verify the report.

Any such sale, however, would need RBI approval. 

Jefferies Financial Group on Monday became the first major foreign brokerage to drop coverage on Paytm-operator One 97 Communications Ltd. until the news flow around the struggling Indian fintech major “settles down”.

The investment bank has moved the stock to “not rated”, weeks after lowering it to underperform after the Reserve Bank of India last month ordered Paytm Payments Bank to halt its key operations, citing non-compliance. 

Paytm has seen its shares lose more than half of their value since the banking regulator’s surprise clampdown amid concerns over the continuity of its business model.

“Without a banking license, Paytm’s business model will now become similar to pure payment service providers,” analysts Jayant Kharote and Prakhar Sharma wrote in a Feb. 18 note. “Paytm’s focus will now move to ensuring customer retention, and we believe it will dip” into its $1 billion cash reserves for spends on retaining users, the analysts said.