Paytm Payments Bank: Macquarie shares view on Vijay Shekhar Sharma resignation

Foreign brokerage Macquarie has reportedly maintained its 'Underperform' rating on One 97 Communications Ltd (Paytm) with a target of Rs 275, as the foreign brokerage believe the survival of Paytm Payments Bank is in question, even as Vijay Shekhar Sharma resigned from the bank board. 

Macquarie, as per ET NOW, said Sharma is trying to salvage some value from PPBL and by stepping down from the board he was sending a message to the RBI that he is willing to give up control of PPBL. Macquarie said the RBI would have to provide some relaxation to PPBL in order to ensure survival but the broking firm does not expect the central bank to authorize any related party transactions between Paytm and PBBL in the future, ET NOW reported.  

The Macquarie note came as Paytm in a filing to stock exchanges said PPBL's future business would be led  by a reconstituted board, which would be led by ex-Central Bank of India Chairman Srinivasan Sridhar, retired IAS Debendranath Sarangi, former Executive Director of Bank of Baroda Shri Ashok Kumar Garg, and retired IAS Rajni Sekhri Sibal.

Paytm said it supports the payments bank's move of opting for a board with "only independent and executive directors by removing its nominee." Paytm said it was separately informed that Sharma has also resigned from the Board of Paytm Payments Bank to enable this transition. PPBL has informed us that they will commence the process of appointing a new Chairman,” Paytm said.

Macquarie, as per ET NOW, said that some lending partners are looking again at their relationship with Paytm and that its lending business  may take a hit if partners scale down or terminate their relationship with Paytm.

The RBI had last week asked the National Payments Corporation of India (NPCI) to examine a request from Paytm that sought becoming a third party application provider. This is after the RBI stopped PPBL from taking any fresh deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, and NCMC cards.

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