YES Bank, Paytm shares in focus today. Here's why

Shares of YES Bank Ltd and One 97 Communications Ltd (Paytm) will be in focus on Thursday morning after the former’s managing director and chief executive officer Prashant Kumar while addressing a press meet reportedly said his bank was open to taking over the merchants acquired by Paytm Payments Bank Ltd (PPBL). Earlier, there were reports that YES Bank was among four banks that Paytm was looking to partner with for enabling UPI transactions.

YES Bank shares fell 5.06 per cent to settle at Rs 23.84 on Wednesday. Paytm shares declined 4.99 per cent to close at 406.20. The RBI FAQs recently clarified non- PPBL linked merchants, which account for 85 per cent of total Paytm merchants, can continue to function as normal and gave a 15-day extension till March 15 for most PPBL-linked activities.

The RBI's subsequent update clarified customers @paytm UPI handles could be migrated to banks post approval from NPCI, meaning key linkages between Paytm and PPBL will be transferred to other banks via Paytm.

Calling it a good opportunity, Kumar reportedly said the acquisition of Paytm Payments Bank’s merchants would need the private lender to undertake compliance and due diligence on KYC (Know Your Customer) verification. Kumar, as per Moneycontrol, said Paytm has a large customer base within the merchant side and that his bank is open to acquiring the merchant accounts.

“On average even if these merchants transact for nearly, Rs 25,000 a day, it is a big opportunity,” Moneycontrol quoted Kumar as saying in a press meet in Bengaluru.

Kumar, as per the media report, said that there would be a proper KYC compliance process that will be undertaken by the bank if it succeeds in acquiring the merchants.

“Regulator is very clear, we cannot shift risk from one entity to another. If there have been risks identified in compliance or any other risk within Paytm (and PPBL) because which the regulatory action is taken, then we need to make sure the risk is not migrated to other entities and rather resolved and taken care of,” Moneycontrol reported Kumar as saying.

UBS believes Paytm can retain a large part of its customer and merchant base post certain approvals from the National Payments Corporation of India (NPCI). It still expects 15-20 per cent churn in merchants, customers and devices in Q4 over Q3 levels, along with a 60 per cent sequential decline in loan origination.