Last update: March 15, 2024 11:56 IST
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Paytm stock (representative image)
Paytm has also been advised by NPCI to complete the migration of all existing handles and commands to the new PSP bank as soon as possible.
Shares of One97 Communication rose 5 per cent to hit the upper band of Rs 370.70, a day after it received approval from NPCI to act as a third-party UPI app in the multi-bank model, like rivals PhonePe and Google Pay. . Axis, HDFC, SBI and YES Bank will be the payment service provider banks while YES Bank will act as the merchant acquiring bank for both existing and new UPI merchants.
“YES Bank will also act as the merchant acquiring bank for OCL’s existing and new UPI merchants. The “@Paytm” handle will redirect to YES Bank. This will enable existing users and merchants to continue carrying out their UPI transactions and automatic payment obligations seamlessly and uninterrupted,” NPCI said in a statement.
Paytm has also been advised by NPCI to complete the migration of all existing handles and commands to the new PSP bank as soon as possible.
Analysts at Jefferies India Pvt Ltd said the development removes the last remaining regulatory hurdle to ensure a smooth transition for customers and sellers.
Paytm's stock price plunged by more than 50% following the Reserve Bank of India's regulatory action. RBI has placed significant restrictions on Paytm Payments Bank Limited (PPBL), a partner entity of One 97 Communications. As per these restrictions, after March 15, 2024, Paytm Payments Bank will no longer be responsible for accepting new deposits into users' wallets and accounts. However, on February 23, 2024, RBI advised NPCI to review One97 Communication Ltd's application to become a Third Party Application Provider (TPAP) for UPI channel so that Paytm app can continue to operate using UPI as per regulations. I did. .
The move allows Paytm to function more similarly to its rivals, but analysts say it could shift investor attention from regulatory hurdles to operational performance.
However, analysts at Jefferies India said they would wait for clarity on user/seller retention and the path to normalization of the lending business.
“Paytm’s focus will now shift to ensuring customer/merchant retention and we believe it will free up cash reserves of ~Rs8500 Crore to spend on user retention,” said analysts at Jefferies.
Additionally, there may be a number of possible outcomes for the company in the absence of a gradual government crackdown, depending on whether or not it retains its users/sellers.
Analysts at Jefferies said a normalization path for the (partially halted) lending business would provide clarity on the revenue/EBITDA trajectory. They identify both positive and negative risks arising from user/merchant retention, revenue traction, and cost control. Analysts also remain vigilant for clarity on the decline figures and the path to normalization of the lending business.
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